Teaching Kids Basic Finance: Essential Skills for 8-10 Year Olds

Children should be taught the principle of ‘waste not want not’ during their formative years so that they develop a deep appreciation for the products they use and understand the value of financial responsibility.

Encouraging Practical Application of Money Management

One practical way to teach basic finance to children is by taking them to bazaars and markets. At these locations, they can observe how people verify bills and learn to count and give exact change. These activities not only make learning financially conscious but also engage their practical skills in counting and problem-solving.

Basic Financial Skills I Learned from My Parents

My parents instilled some invaluable financial skills in me from a young age. These skills are essential for building a strong foundation in financial literacy, a key component of life.

Save for a Rainy Day

A fundamental principle is to save a portion of any income. For instance, if you have 10 rs in your pocket, spend only 2 rs and save the remaining 8 rs for emergencies. This practice teaches children to be prepared for unexpected expenses and can instill a habit of saving money for future use.

Always Keep Cash on Hand

It's important to keep cash with you at all times. Card payments can sometimes diminish our perception of the value of money, as we see only the numerical value on the screen rather than the actual cash being spent. By using cash, kids can understand the tangible value of each rupee and develop a deeper understanding of budgeting and spending.

Taking Your Time to Make Buying Decisions

Another crucial lesson is to delay purchases for a few days. This practice helps you reflect on whether an item is truly needed or if it's just a whim. Often, giving it 2 or 3 days will help you realize that you don't necessarily need to make the purchase right away, leading to a more rational use of your money.

Buy Necessities, Not Wants

Encourage your children to differentiate between needs and wants. Buying items that are necessary is different from purchasing those that are merely wanted. Always ask yourself, 'Do I need this or do I want this?' Needs are essential for your well-being, while wants are often temporary or situational desires. Make a conscious effort to buy things that are truly needed, not just desired.

Conclusion

Teaching children about basic finance is a vital life skill. By instilling these principles from a young age, you can help them develop a strong financial foundation that will benefit them throughout their lives. Implementing practical activities and personal examples can make the learning process engaging and effective.