In the post COVID era, the world is starting to embrace the thought of a cashless economy and it’s raised some interesting questions on how we impart financial knowledge to our youngsters.
2015 financial literacy assessment by the Programme for International Student Assessment (PISA) found that slightly below 80% of children aged 15-24 made payments online and in 2015 Standard & Poor Survey found that only 57% of United States adults were financially literate with a solid understanding of key concepts of digital money but in 2017 survey conducts on parents, kids & money by T. Rowe Price found that parents who discussed financial topics with their kids were more likely to possess kids who say they’re smart about money.
Introducing money: Ages 3-6
At now in your child’s cognitive development, he or she should begin to know the concept of counting, so it’s the right time to introduce them to the overall concept of money.
According to a great philanthropist named Tracie Fobes, “The reason kids love coins is that it feels more real to them. They can put the coins into their piggy banks which are given by parents. Not only that but once you use coins, you’ll start to show them the way to add them to total another value. For instance, you’ll teach your child that ten dimes are an equivalent together dollar.”
There are four essentials points your child should learn at a tender age:
How people spend: Ages 6-10
Beginning at age 6, children begin to know cause and effect relationships which changes the way they perceive money. By now, your child can probably see that:
- Money is directly tied to items
- Parents work for money
- Money is spent differently (smaller items, sort of a book, may only require one purchase, while larger items, sort of a house, require multiple payments)
- Some purchases are made without physical money
Apps that can help
We’re close to dive into the planet of digital currency, so now’s an honest time to bridge the gap between the physical and therefore the abstract. Using allowance apps like iAllowance while still distributing their allowance in physical money may be a good way for your child to form the connection that the numbers on the screen represent real value.
iAllowance helps children set their money aside for specific goods and services that they need, while parents still maintain full control. Once you are feeling your child is prepared, you’ll make the switch to digital currency.
Introducing Consequences: Age 11-13
When a kid reaches his teenage, he starts to develop a way of reason and complications, transforming from emotionally-driven to rationally-driven deciding. At this age, a toddler begins to desire independence, spending longer with their friends rather than their parents. Teens spend about six hours on the average consuming media, and financial peer pressure may be a very real force. “Once they’re sufficiently old,” says Bobbi Rebell, “hand over the phone to allow them to buy things digitally (with your supervision).”
Once your child features a firm grasp of the fundamentals, it’s time to end the transition into the cashless world. But don’t just introduce e-commerce apps like PayPal or Venmo. Use this point as a chance to expand their financial knowledge to incorporate long-term consequences.
Apps that can help
Cash App offers a platform which is very important for teenagers. Cash App is the platform which is used for transferring money from one person to another. It is also used for buying & selling of Bitcoins & other cryptocurrencies. Cash App also have some problem in their interface. Cash App has some points like Cash App Transfer failed, Cash App Refund, which is very good for children to learn at this age. It’s like an enhanced allowance app: Parents have full visibility of their children’s finances, can set goals, and may enter during a set amount for annual allowances.
Venmo & PayPal are the other examples of these types of apps which can be very beneficial at this stage.
Building wealth: Ages 13-15
When kids are transforming into teens, they start to understand abstract concepts and develop a way of long-term consequences. Teens also hone memory and therefore the capacity for reason, while actively starting to distance themselves from their parents. Your child goes to start out identifying more with their friends and other social groups, so it’s the right time to allow them to spread their wings.
Preparing for the important world: Ages 15-18
Mid-to-late teenagers can process complex problems and fully imagine the longer-term consequences of their actions. By now, your child features a solid foundation of monetary literacy from the essentials to more complex ideas of growing wealth. It’s time to speak about the most important expenses they’ll likely ever have (barring children of their own).
With college on the horizon, have a discussion together with your children about taxes, good vs. bad debt, and the way handling them responsibly can empower their financial future.
Entrepreneurship: Ages 18+
Many believe that the essence of monetary literacy is to instil fiscal security for his or her children within the future. Wise practices and conservative choices can give your adult children the power to weather difficult financial times on their own. But there’s another benefit: confidence.
Once someone features a comprehensive understanding of the way personal finance works, they’ll have the arrogance to form bolder moves when they’re older. Even Warren Buffett teaches children about the connection between financial literacy and starting a business. And he’s admitted that youngsters today know quite he did growing up.