The financially literacy rate for Malaysia is alarmingly lower than most of the world. So the question is: How can we ensure our children understand money better? After all, money is an important aspect of our lives and is something we use every day.
As parents, it is our job to teach our kids key life skills. Managing money is one of these key life skills. Our habits and decisions with money can in one way or another, influence how our children use money.
So, what is money?
Money is often talked about as something that can't buy us happiness, but it does give us options.
When we have more money to spend, we are able to do things like take vacations or go out for dinner without worrying about how much it will cost. When managed correctly, having money could possibly make our lives easier, and thus, experience a life with less hiccups.
Money could also potentially be a source of stress and anxiety. Sometimes, it can cause arguments, even rifts, in marriages or families. The people who experience this are the ones who are not capable of handling their finances the right way.
Based on the above, we all acknowledge that money is important and we should have discipline over it. Why? Here are some compelling reasons:
● Money builds financial stability.
● Money supports quality of life experiences and opportunities.
● Money brings forth control over decisions.
Now that we have established why money is important, let’s better understand Financial Literacy and how we should teach it to our children.
Financial literacy is defined as having financial, credit and debit management knowledge that is necessary to make financially responsible decisions – these choices are integral to our everyday lives. While teaching children about finances may be an intimidating task, providing effective financial education can help them develop an understanding of basic concepts.
It is understanding how money works from earning it, saving it, spending it, growing it, protecting it, and managing debt. Being financially literate will help our children understand these concepts as they grow up and make better decisions on their own as adults. In order for them to become successful in life, they need to know these fundamental knowledge and skills that can set them up for success.