the importance of understanding the financial system from an early age part 1

 

Financial education from an early age Financial education is not only for rich people.

Providing financial education to children is important for parents.Whether it's pocket money or incentives to make money at home, give cash gifts or support small businesses such as: B. Try your hand at sales.

Even so, often our children are already involved in money management. In its simplest form, children understand that they have to ask their parents for money to buy what they want.However, parents are sometimes hesitant to talk to their children about money.Because, children feel they are still too young to understand money.

Some parents feel uncomfortable talking about money in general and avoid the topic. However, there are actually many financial concepts that can be introduced to children in an approachable way.  To ensure that our children are financially secure and successful throughout their lives, we must instill the following financial education skills from an early age:

1.The Value of Money 

``To understand the value of money, you have to understand what is important.''Acquire, Manage, Grow,'' Clever Girl Finance Founder and CEO Bola Sokunbi told HuffPost on Wednesday (September 20, 2023).He practices this by allowing his children to make small mistakes with the money given to them.For example, if children spend their pocket money on candy after receiving it, they are missing out on the opportunity to save and invest in bigger things.

This is an important step in preparing your child to make wise financial decisions in the future. Mr Sokunbi emphasized that financial education is not only for the rich.He said something as simple as shopping at the grocery store can be a learning experience. When going shopping with kids, she recommends figuring out how many items you can afford within your budget and looking for items that are on sale or at low prices.

2.Keep Learning Kara Perez, 

financial educator and founder of Bravely Go, says financial intelligence is an acquired skill, not something you're born with.

“This is a tool that requires knowledge to function. "No one is born knowing how money works," he said. Therefore, it is important to continue learning about money and use that knowledge to improve your financial skills.

3. Money should support your happiness and health

 According to Rita Soledad Fernández Paulino, founder of the financial education community Wealth Para Todos, children should understand that money is theirs. It must be taught that money is a tool to meet needs.Including their joy and happiness.  Including social assistance now, in the near future, and after retirement.Creating a budget ensures that your money is spent for future happiness and prosperity.

4. Money is not a taboo topic.

 Shang Saavedra, financial coach at Save My Cents, emphasizes the importance of talking about money from a young age. 4 and 5 year olds can understand money as a concept. Saavedra also encourages parents to be honest about their financial constraints, especially if the family budget is limited.

5. The Importance of Saving

 According to Certified Financial Advisor Jen Hemphill, saving is important for preparing for emergencies and achieving long-term goals.He believes that parents can start teaching this concept to their children from an early age by letting them set aside some of their pocket money for savings.Therefore, it is never too early to start teaching financial education to your child.

Whatever your age, a simple approach and honest conversations about money can help you develop a deeper understanding of personal finance.“This is a good program.

"We at Committee IX support this government initiative and because it concerns education, our Committee invites you to be one of them," added Melki.

This module will be implemented in stages next year in a co-curricular format for Class X SMA/SMK.In addition, further intracurricular and extracurricular development is planned.Comprehensive implementation at the national level, from PAUD to higher education, is expected to be completed in 2026.

For your information: The project module for increasing the visibility of Pancasila students includes Social Security with the theme ``Sustainable Lifestyle'' with the theme ``Social Security for a Better Future'' Masu.

This module builds a more just and sustainable society from an early age, increases students' social security literacy, fosters wider awareness of the importance of social security, and develops a personality that fits the Pancasila student profile.

This module is a follow-up to the implementation of Presidential Decree Number 2 of 2021 concerning Optimizing the Implementation of Employment Security and Social Security Programs, Presidential Decree Number 1 of 2022 concerning Optimizing the Implementation of the National Health Insurance Program and National Health Insurance Program.  Executive order.

Social Security Roadmap 36th Edition 2023 2023-2024.  This module also aims to provide students with the opportunity to learn about social security and its value.

Therefore, parents and school teachers should work together with their students in this project module to help them become the next generation who care about social security and play an active role in creating a just and prosperous society.this into practice.  Contribute to society and encourage the development of Indonesia's human resources.  better quality.

Encouraging financial literacy among children and teenagers To reach children and teenagers

PT Bank Negara India (Persero) Tbk (BNI) launched two new products specifically designed to meet financial literacy needs, namely Taplus Anak and Taplus Muda.  Customer trading needs in this segment.   Through the Taplus Anak product, BNI provides opportunities for children to learn about banking services by providing savings books and special debit cards.

This is an important step that helps children understand banking and financial concepts from an early age.  On the other hand, Taplus Muda provides a more flexible banking experience because it does not require a savings book for over-the-counter transactions.  This makes it easier for teenagers to manage their finances without certain restrictions.

These two products provide flexibility for customers to design their debit cards with their own photos so that they are more personal and unique.

DPR RI Siti Mufattah from Committee XI also appreciated BNI's progressive steps in encouraging financial literacy among children and teenagers. Citi further added that increasing financial literacy among the younger generation has a positive impact on economic growth, financial system stability, poverty alleviation and reducing economic disparities in society.  This improves people's quality of life by enabling them to better plan their short, medium and long-term financial goals.

Financial Literacy

Financial literacy is an individual's ability to understand and manage their finances wisely. This includes understanding basic financial concepts such as money management, investment, savings, credit, insurance, and long-term financial planning.  Financial literacy allows individuals to make wise decisions about how to manage their money, avoid excessive debt, and build long-term wealth.

Financial education starts at an early age.  An important first step is teaching children the importance of money management and giving them a basic understanding of savings, spending, and financial planning.  A good understanding of financial literacy from an early age helps children develop good financial habits and prepares them for a more financially secure future.

Financial literacy also includes understanding risk and making wise decisions.  Financially literate people can analyze the risks and benefits of various financial options such as investments and loans.

You can also detect financial fraud and protect yourself from malicious activity.  Financial literacy also refers to understanding the financial system and the economy as a whole.  Financially literate people understand how economic policies, interest rates, and inflation affect their finances.  You can also track financial market developments and make smart decisions based on your understanding of the economic situation.

Parents need to educate children about money from an early age.Check out Robert Kiyosaki's interesting tips.

Parents need to teach money management to their children from an early age.

According to the official Rich Dad Poor Dad website, Robert Kiyosaki, in his book ``Improve Your Financial IQ,'' describes four eras of humanity: the Hunter-Gatherer Era, the Agricultural Era, the Industrial Age, and the Information Age..is discussing.

According to Kiyosaki, we now live in the information age.It all started with the advent of personal computers and access to all kinds of information through technology.But the problem is that losing money has become quicker and easier than ever before.

Information flows and changes so quickly that children are inundated with contradictory information, making it difficult to understand and respond effectively to economic situations.One of the keys to financial literacy is understanding the importance of being proactive.

Reacting to any information can be dangerous.This is why financial literacy is so important for children.How important is financial literacy for children?

In fact, your child's financial literacy can only be achieved through two things:Learn from your own mistakes (some lessons can range from costly to sad) Learn from your parents Therefore, parents should: Actively help manage your child's finances so that they are ready to face a successful future

According to Kiyosaki, the current school system does not provide the financial education that children need.  Therefore, parents must assume this responsibility.  And the sooner you start, the better.  Now, this may seem like a daunting task for many parents, especially those who do not consider themselves financially savvy and have not yet learned how to achieve financial independence.

Robert only learned financial knowledge from his best friend's father, "Rich Dad".  He later became one of the richest men in Hawaii because he believed in his financial strength.  But that's why parents have to start now.  Otherwise, one day your child will be in a similar uncomfortable position.

You have the power to stop this vicious cycle of financial illiteracy.  All you need are the right resources to complete your education and pass it on to the next generation.

Start teaching money management.

The best way to teach money management to kids is to introduce them to the concept of cash flow: money coming in, money going out, and at the end of a certain time period (usually a month, quarter, or year).  about getting them to understand how much money they have left.

Teaching children the relationship between income, expenses, and savings helps them understand the value of money. And you'll want to do this long before your child turns 18 and you're bombarded with attractive credit card offers for college.  Of course, learning about accounting, finance, and investing sounds pretty boring to the average 9 year old.

Fun learning is needed here.  Learning through play is a very effective learning method for children (and adults).  Robert Kiyosaki suggests that parents start teaching children about money from an early age.  You are never too young to learn financial literacy.

Additionally, before you find out about bad behavior from friends, TV shows, and other influential sources, it's a good time to avoid false assumptions and misunderstandings about your finances.

And you're not alone in promoting your child's financial literacy long before most parents think.

When asked what the biggest mistake parents make when teaching their children about money, billionaire Warren Buffett said: Kiyosaki says it's all about building a foundation of financial literacy.  I believe it starts here.  There are four basic elements that parents need to understand.

Understanding each element will help your child become successful and wealthy:

Understanding the Difference Between Assets and Liabilities

Robert Kiyosaki says this is the essence of financial freedom.Many people think they know the difference.  Some people may think that owning a house is an advantage, but in reality it is not.  The easiest way to define the difference is that an asset is something that puts money in your pocket.  On the other hand, debt robs you of your money.

In the example above, the house is a liability because it has a mortgage, maintenance costs, taxes, etc. associated with it.  A house can become an asset if there are tenants who pay rent and cover all costs related to the house.  Once you start generating cash flow from your home, it is no longer a liability.

Avoiding this gap is only

possible by teaching children the importance of financial literacy and confidence in managing money.  Remember, rich people are not dependent on the masses.  They are trendsetters.  They think independently and make their own financial decisions.

Cash Flow and Capital Gains

One thing you should always explain to your kids is that cash flow and capital gains are very different, even though they are both investments.  Capital gains are the profits you make when you sell an investment at a higher price than the purchase price.  Sometimes it can be a game of chance, as many factors are left to chance.

Instead what rich people do is cash flow.  If you want to generate cash flow, buy a property with other people's money, find tenants who will pay your expenses, and collect rent.  This may be a capital gain, but it doesn't have to be a profit.

You can get rich with debt and taxes.

Financially literate people know that you can get rich with debt and taxes.   It may be confusing, but to improve your child's financial literacy, you need to cover all the bases.  Here we will discuss good debt and bad debt.

Bad debt arises from borrowing money and throwing it away on debt that will never give you a fair return.  Good debt, on the other hand, comes from borrowing money and using it to buy assets that can put money in your pocket.

Benefits of teaching financial planning from a young age Teaching financial planning from a young age is not about how much money you have, but about how to spend it wisely.  All children must be taught that money is not something that is just obtained, but to get it there must be effort first, for example work that requires thought, energy and time.  This will help children understand the value of money more easily. They also understand the efforts parents have to make.

This will also prevent your child from developing unnecessary habits.

By having your child organize and distribute pocket money and other money, you can practice management skills that are useful in many other aspects of life.  Management and allocation skills help convey the importance of prioritizing limited financial resources.  Even if parents don't teach their children about money, children will find their own way of handling money.

However, without proper guidance, implementation will be difficult and lead to huge financial losses.  Of course, parents want their children to live a decent, independent life and avoid these bad possibilities.  Therefore, education and parental involvement is the best way to achieve this.

Teaching Children Financial Planning Teaching children means developing thought patterns, behavior and habits that they maintain into adulthood.  When children are young, it is easier for them to learn and form thinking patterns.  This thought pattern becomes a behavior or habit that lasts a lifetime.

If you don't instill good financial habits in your children, they will grow up to be financially dependent adults who won't be able to manage their own money.  Financial lessons are taught step by step, so parents don't have to worry about making things too difficult for their children.

Introduce the concept of money to children by making it clear that its use is an inseparable part of everyday life.  Let them see and copy how you make payments, make transactions, store money in your wallet, and withdraw cash from ATMs.  Next, we will slowly introduce you to financial management, starting with the basics.  When your 3 to 6 year old child starts learning to count, use coins as a teaching aid.  The aim is to introduce children to money, its form and value.

Since elementary school, pocket money is an opportunity for children to learn to manage and save their own money.  Giving children a weekly pocket money teaches them to be thrifty and save for future needs.  If your child is capable and old enough, use his monthly pocket money to try more. Here are some tips for making a financial plan together.

Let children try it themselves.

In order for children to better understand what You teach them, they must do it themselves.

This way they know the consequences of their decisions and can learn from them.

However, before you give your child the chance to try it for themselves, you need to explain the basics first.

Take your children shopping. Taking your children shopping is also a way to teach them financial planning from an early age.

If your children are older, ask them to help you make a shopping list and compare prices to find out how to purchase items in the most cost-effective way.

Also demonstrate the checkout process so that children understand that every item they own is the result of effort that does not come naturally.

3.Buy your child a piggy bank.

Teaching children to save is one of the easiest things you can teach them.  If they want to buy something, explain that they have to buy it with their own money, not just give it away.  Children find it easier to understand short-term plans, for example buying toys, compared to future plans.

Every time you receive money, remind yourself to set aside some for savings.  Physical piggy banks are more attractive to young children because they can see the changes in their money balance directly.  Once you understand the more complex concepts, we'll walk you through the process of creating a bank account and saving money.

How to use the app

If your child already has a cell phone and receives a weekly or monthly allowance, you can download the app to help them learn how to manage their money.  For example, an application for recording pocket money transactions.  The application system automatically calculates, so there is little chance of miscalculation.

Teach Sharing

Apart from collecting and spending money, sharing is also one of the keys to financial management.There is equally important value in saving money for charity, including saving to buy something for someone else.  This value of sharing teaches children that we live side by side and mutual prosperity will not be achieved if there are still people who are struggling.

Teaching financial planning from an early age through games.  Another effective way to educate children is to give them direct experience through games and other simulations.  Children prefer playing rather than studying, so this method is not too burdensome for them.

Let them play as a cashier or open a shop.  Execute your trades as realistically as possible to understand the value, process and effort required to make money.  The Monopoly game is suitable for children aged 8 years and over as an introduction to money management and investing.  Technology also helps children learn while playing.  Many simple games on mobile phones and tablets use the concept of trading with simulated currency to upgrade and improve the player's skills, for example ``The Sims'' and ``Chicken Porridge Express.'' Has occurred.  Therefore, the player must try to "save" to continue the game.  Of course, you have to be careful with your playing time so as not to overdo it and not trade with real money.

For children who already have weekly or monthly pocket money, Pocket Money Transaction Record is a useful application to help them learn money management.  This application calculates automatically, so there is little chance of calculation errors occurring.  One of the core things about managing a household budget is not only collecting and spending money, but also sharing it.  There is equally important value in saving money for charity, including saving to buy something for someone else.

This sharing value teaches that humans live side by side, and that coexistence and shared prosperity are not possible if some people experience difficulties.Better Financial Management The key to success in teaching financial planning to children from an early age is to do it clearly and consistently.Children tend to imitate their parents' behavior.

Therefore, it is important to demonstrate behavior that is consistent with what you are teaching.Children cannot develop thrifty habits if their parents are wasteful.Managing money is not easy even for adults.Teaching children good financial knowledge indirectly becomes a re-learning process for adults.Even though it feels heavy, it will be an irreplaceable investment in your child's future.

In fact, it is not impossible to prevent your child from giving birth to a sandwich generation in the future.