We always receive questions from our Rahet Bally mamas on how to raise financially aware and responsible kids who understand the value of money, and how to use it. While financial literacy can seem too complex to introduce to your kids at a young age, those early years are crucial to help them understand the useful ways they can spend money.
How can you teach them this at an early age? You can help your child learn how to be financially literate by encouraging them to set objectives, understand the benefits of saving, distinguish between wants and needs, and learn how to smartly earn, spend, and save.
Setting a good example for your kids plays an essential role in their learning journey. During your child’s tween and teen years, set a good example by opening a saving account for your kid and introducing them to the whole process. If you are not sure where to start, Arab Bank has got you covered with its new savings program, Arabi Junior, with its various features and benefits!
The Arabi Junior program combines banking and non-banking services to allow parents to save for their children who are under the age of 16. The program has an array of benefits that include an education savings plan, special discounts in various venues. Arabi Junior also gives you a saving account with interest and various deposit options at preferential interest rates. Not only that, but parents can easily transfer money from their accounts to their kids’ Arabi Junior accounts without paying any fees.
Here are five ways you can help your children gain these skills through games and activities that simulate relevant real-life experiences:
Ways to introduce financial literacy to your children:
- Help them understand needs vs wants
- Explain saving, spending, and donating
- Involve your child in household finances
- Encourage your child to start his/her own project
- Incorporate educational activities during playtime
Help them understand needs vs wants
Simply explain to your child that needs are basics that a person can’t live without, like food, housing, and education. Elaborate that wants are luxuries, such as smartphones, candy, and high-end brands. This will help them differentiate between what is worth spending on, while understanding the concept of saving.
Explain spending, saving, and donating
To illustrate the difference between saving, spending, and donating, you can assign three jars to each. Then, encourage your child to divide their pocket money into the following:
- How much they want to spend on weekend outings
- How much they want to save to buy something valuable later on
- How much they want to donate to a charity organization of his/her choice
To help them visualize this more, you can use Arabi Junior’s ‘Tip Your Kid’ feature, which enables you to save for your children with every purchase you make using your debit or credit card.
You can also provide your child with the experience of making a purchase on their own through “BandPay”, also offered as part of the Arabi Junior program. BandPay is a smart payment bracelet that enables your child to pay with a Visa debit card without needing the actual card.
The goal is to allow your children to make decisions on their own while helping them understand that you won’t give them any more money if they finish their allowance.
Involve your child in household finances
Let your child join in setting the monthly budget of your house by doing the following:
- Ask them to write down all the monthly expenses and allocate the budget accordingly.
- Highlight that good budgeting means that the basics are financially secured before spending on any extras.
Encourage your child to start his own project
Children are often unaware of the talent they have that they can build on to earn money. This can include accessory making, baking, or other types of crafts and activities. Your kids will enjoy learning about setting prices for items, making financial trades, and how to spend on the project from its revenue. Encourage your child to take this step with the help of ‘e-Tawfeer’, one of the outstanding features of the Arabi Junior program.
e-Tawfeer is a digital saving account via the Arabi Mobile application aimed to support young people who want to save. It offers loyalty points on the account balance that can be redeemed in cash and allows the child to set a savings goal for a certain period of time. He/she can insert the figure and the period they want to save into the mobile application and it calculates the amount needed to be put aside each month.
You can join the “Arabi Junior” program from Arab Bank so that you and your kids can enjoy the value of saving! Apply here.
Use play as a way to learn
You can start explaining finances to your child through fun activities appropriate for their age.
- 2-3 years old: Play the coin identification game
Put a coin on a chart and let your toddler trace the outer border then color it. Let them do this with different coins, then match their drawings to the real ones.
- 4-5 years old: Pretend play restaurant game
This entertaining game can help indirectly teach them about money. Let your child take your order, serve you a meal, and bring you the bill.
- 6-8 years old: Play Monopoly
Monopoly is very effective in teaching kids all about finances in real life because it includes purchasing decisions, savings, and paying taxes.
- 9+ years old: Take them with you to the bank
Let them watch the process of opening an account, familiarizing them with the debit card and how it can be used.
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