It is increasingly difficult for us to save. Squeezing the salary to make ends meet is an odyssey for many families who have seen their income decreased as they go through one financial crisis after another. For this reason, giving children financial education guidelines begins to have great relevance not only for families but also for teachers.
From an early age, children can learn to save and improve income management. Learning a series of tips to lead healthy finances and be prepared for any unforeseen events can be vital for your future.
7 Tricks to Teach Financial Education to Children
1. Save from the start of the month
To have a good management of finances, you have to start by saving money for any unexpected expense or better yet, a future investment. A good way to do this is to have a small amount of our salary at the same time it is entered, transferring it periodically and counting every month with the same amount of money to meet the expenses. Thus, savings will grow little by little without almost realizing it.
This plan that works with the payroll of adults can also begin to be built with monthly or weekly pay as the first pillar of financial education…
2. Avoid indebtedness
Asking for loans to deal with an unforeseen event can be a quick solution, but harmful in the long term, since the money will have to be returned with interest. It is preferable not to do so, and even to discard existing debts to start saving and investing.
Children can learn not to borrow money from parents or siblings because it then costs a lot to pay it back. It is better to wait a little while to make the purchases of what we need.
3. Make budgets
Organizing monthly budgets allows you to take into account expenses that are sometimes forgotten because they have another periodicity, such as insurance, which is usually annual. In order to avoid surprises, planning serves to identify in which month there is a greater expense and to be able to face it without problem.
Planning in important times for children such as Christmas, summer or the return to school where expenses skyrocket is essential for children.
4. Seek profitability
Seeking to expand asset returns is one of the ways to improve finances. That is, try to make the possession of some properties generate income to increase savings and investments.” We mean that, when investing, money works for us. This can mean extra income that complements the main ones or, even, passive income that, for example, can arise from receiving dividends, rents …, although the latter case is available only to a few, “says Victoria Torre, head of Digital Offer at Singular Bank.
For this, it is important to set profitability objectives and study what types of investments we can make, taking into account risks and liquidity since it does not mean the same to invest in a consolidated business than in a start-up, for example.
Although making investments is a distant goal for children and adolescents, parents may consider teaching them the importance of being cautious or risking at specific times.
5. Have a long-term vision
For everything already mentioned, it is necessary to have a long-term vision: saving, investing and creating budgets are strategies that must be done with a vision for the future so that finances improve. It is important not to go in a hurry and keep in mind that in the long term the compound interest will turn in favor and if the investment has been successful, it may be convenient to continue in it so that it continues to grow.
Saving money from birthdays or First Communion to pay for studies in the future is having a long-term vision.
6. Avoid consumerism
Good finances are those that avoid falling into unnecessary purchases of things that are often not even used. Trying not to fall into these impulse purchases is a key pillar for good money management.
“Consumerism is linked in many cases to certain times of the year, such as Christmas, or to commercial promotions, such as Black Friday. To avoid or control it, there is planning, in addition to the control of emotions, “they recommend from Singular Bank.
7. Train and advise yourself
To improve finances you have to know how. While much information can be accessible and can be put into practice in a self-taught way, sometimes it will be necessary to have the advice of an expert.
Specialists can help to acquire sophisticated investment products for which some knowledge is required and, also, to manage matters such as succession or construction of assets so that they have the highest possible profitability.