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Taking the first step in the ladder of financial literacy for kids is the most important one and this will let them know more details about the ones following. Before teaching your child more about banks and the types of accounts there is, it is important to teach him/her to save money and share your thoughts about why such a thing you consider beneficial.
Saving money is an idea that kids should consider because they have to understand that sometimes they will never be able to get what they want unless they save money for it. The problem is that some kids like the idea of saving their money on their own without using the help of anybody and that might lead to them forgetting the secret hiding place which they kept their money in.
The conversation held between James and Aaron in this video was about the two different account types that the person could open in any bank and the difference between them both. Aaron was telling James that putting the money he was trying to save in a bank account is considered the best way to take care of that money, but because he is still under 11 years old, he could only open a savings account and not a current account.
Financial education for kids is very important even when taken with tiny steps at an early age, because letting the kid know the difference between the savings account and the current one will also let him/her know that by 11 years old or when a little bit older, he/she will need to transfer from savings to current. The savings account is the one that allows any person at any age to save money and even receives interest when he/she comes to withdraw money, the current account on the other side is the one that gives the person a debit card through which he/she will be able to buy things only, withdraw money from the ATM machine, pay with it, etc.
When mentioning the importance of financial education for kids, some people get confused and start wondering if this is something their minds will accept and handle or else is something which they might not be able to deal with. Talking financially is OK with the kids but when you try to make the whole thing look and appear easy, you don’t have to mention the complicated details of the bank world, but just put it simple with the basics (https://www.youtube.com/watch?v=a5Qu1YN43P8).
There are some topics which parents should focus on while homeschooling their kids and teaching them some facts related to finance. Financial education for kids should include a talk about earning money (https://www.youtube.com/watch?v=XHwcbRjWEds), it should be also about financial capability for kids (https://www.youtube.com/watch?v=QQgOJoZduRc) and this will of course include letting them share what they might have heard before and ask the questions which they might have in mind about money and saving it.
Aaron was trying to tell James that banks are very useful when it comes to saving any money that he might want to use in the future and instead of putting it somewhere in the house and then forgetting where that secret hiding place was, open an account for himself in the bank to save his money in until he is ready to invest it in something.
Of course kids are still too young to do anything on their own, they will need the assistance of their parents when it comes to anything related to finance and financial education and literacy, because they are the ones who know almost everything and the ones who will be able to help.
Financial education for kids is definitely important but it should be done through easy and simple steps that will give them the chance to receive the information and take it all in without getting lost along the way, so go for it.
If you have any questions, fire them and we will be more than happy to answer them all and help you deliver the right information to your kids.
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