A Little Financial Literacy in January Will Bring a Peaceful Holiday Season Next December
January 11th, 2012 - Category: Financial Literacy, Money
We hope you all enjoyed the holiday season with your families. We certainly did. The holidays are perfect for enjoying family time together. They provide opportunities for giving service and teaching our children about faith, charity, patience and generosity. They can also be the source of stress, headaches, overspending, disappointment and unnecessary debt. Which was the case for you?
Now is the time to plan ahead for this year’s gift-giving season so that it can be enjoyed worry-free and debt-free. January is ideal for spending a little time with our children discussing the holidays and planning now to save enough throughout the year to be able to provide gifts for those on their gift-giving list. (We would do well to do the same). Doing so is part of a skill set to be found in “Financial Literacy.”
What exactly is “financial literacy?” It is a set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of money. The economic principles you and your child need to know to make informed fiscal decisions and the understanding of various banking and budgetary products and procedures that affect your financial well-being all are part of “financial literacy.”
Instilling good, fundamental financial skills in our children will have a profound impact on their future lives. Kids need to understand that the money we spend and the money they are allowed to spend is money that is earned; it is income. Too many children see mom or dad swipe a card and walk out of the store with goods without realizing that money was withdrawn from the account in the case of a debit or, that money is owed in the case of a credit card purchase. It is important that they understand one works in order to earn money and then that income is to be managed well in order to provide for the needs of the family.
Teaching children basic money management skills, including saving, sharing and spending should be part of a financial literacy legacy we give to them. Simple lessons in investing (even by means of a savings account) and credit can help them understand at an early age that money can either serve you or hold you hostage. Such knowledge prepares them to make critical financial decisions. Find ways to teach them about compound interest; time is on their side. (Future blogs will provide examples and website links you may want to use with your children).
Albert Einstein said, “The eighth wonder of the world is compound interest.” Here’s a video clip that might surprise you. Would you rather have a million dollars right now or would like to take the end result of doubling a penny each day for 31 days?
A Penny a Day for 31 Days or 1 Million Right Now Today?
As parents, it pays to always be on the lookout for a “teachable moment.” When our kids are with us when we use the ATM or are in line at the grocery store, explain that the money you’re getting or spending is money you earned. Try inventing little systems and games that help them to understand money and its uses. The beauty of www.myjobchart.com/ is not only how it teaches kids of any age the value of work, it also provides actual experience in “earning” something that they can save, share and spend.
We hope this new year is the beginning of many wonderful and happy times for you and your family and that, together, we can raise up a generation of money savvy consumers; young people who know the value of work and the value of saving for their futures.
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