Wednesday, September 28

What your children should know about finances from the age of 5, around 9, 14 and 18



How to educate the smallest members of the household in finances Throughout our lives, we face different situations in which we need to have certain financial knowledge. These Christmas dates related to spending can also be a good time to raise awareness and forge a better quality of life for children. Thus, the department of
EFPA Spain Financial Education
shows us how we can educate the smallest of the household in finances in a document that analyzes what are the financial terms and concepts that they should know and handle from childhood.

At age 5: learn the value of money

It is important that children, from a very young age, know the value of all the goods they acquire and learn to value the effort involved in obtaining them.

The ideal is to give them a small weekly or monthly payment, so that they know how to distribute the money in their piggy bank and realize that it is not unlimited. Games are the best way to understand the value of money, some examples for the little ones are «Learn to count money» ;, «How much does it cost? or “Finnelis”.

At age 9: learn to save

In the same way that adults must know all the options we have to draw up a savings and investment strategy, we must learn to transfer this idea to the smallest of the household. At that age, it may be an ideal time for children to begin to manage their available money, based on their interests and particular needs, either for the purchase of a toy or for an activity that they like, and are able to save an amount periodically.

In addition, it is convenient to encourage the saving effort of the little ones with some rewards, as well as to promote solidarity, for example by donating part of their savings to a cause that concerns them.

14 years: learn to use a debit or prepaid card

In the case of adolescents, the idea is similar, they have to understand that, if they want to buy brand name shoes or a video game, their value is above being a basic necessity, therefore, they will have to learn to save a part of your pay to achieve this end.

Most of the banking entities in Spain have specific products focused on minors, debit or prepaid cards that can usually be contracted from the age of 14. The use of these cards, in which a maximum number can be established so that our children cannot get more than the established amount, may be the best way to understand the importance of saving and managing their money. In addition, students who declared to be more autonomous in their financial affairs obtained a better performance in financial competence in PISA 2018 both in Spain and in the OECD average.

18 years: familiarize yourself with savings and investment products

Just as at the age of 14 you can start using a debit card in Spain, when you come of age, a series of responsibilities and rights are acquired that force young people to worry about understanding new concepts related to managing their finances In day to day.

In many cases, they will continue to depend financially on their parents, while they continue their studies, although there are also young people who take their first jobs. In short, when the age of majority has just come of age, it is the right time to know the differences between all investment and savings products, and to prepare simple budgets, in which they balance their recurring income or the allowance of their parents, with their fixed expenses and leisure proposals.

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