How much do your children know about finances? Do you know what investing means, the difference between assets, liabilities, what is a consumer debt and what does interest mean, etc.? If you want them to be successful as adults, you better find out! If not they will be part of the sad 50% of young people between 15 and 29 years old who have already got into debt before even generating income. Learn easy and entertaining ways for your children (and you!) To acquire a solid financial education.
Financial education is an aspect of our children's education in which both parents and educational institutions have been sadly negligent.
In the case of traditional education curricula, financial education is conspicuous by its absence. At the most it is mentioned tangentially in some subjects of mathematics.
In households, the outlook does not look much better. Most parents do not know how to educate their children in the area of finance, since they themselves lack adequate training in this area.
The results are visible:
According to the Sixth National Youth Survey - Injuv 2009, more than half of Chilean youth between 15 and 29 years old have debts. In addition, almost 60% of young people with debts are behind in payments; and of them, more than 30% owes in commercial houses. (El Mercurio, Santiago de Chile, September 2, 2010).
Clearly, a highly indebted young person is beginning their life as an adult on the wrong foot. This debt constitutes an unnecessary burden at a stage of life in which one is starting from "zero". It is quite possible that such a young adult spends his entire life paying interest on consumer debt, rather than wisely investing his money in something that will earn him interest.
In the face of such a bleak picture, what can we parents do to better prepare our children for the future?
Even though financial education is a mystery to many, it really isn't that difficult. It is just one more area in which we must educate our children if we want them to succeed in life.
For that we have to deliver two things:
- Basic knowledge of finances
- Skills for managing money wisely
The problem with the money issue, just like any other abstract matter, is its lack of appeal to our offspring. We couldn't use the financial section of our newspaper as a nighttime story before going to sleep!
So it's important to get creative and find resources that are designed for each stage of your life.
The best way to teach a child is to do what children do best: play.
There are several educational games that provide basic financial knowledge and also promote money management skills.
Here are some of them:
1. Monopoly:
The classic of financial games. Monopoly Juice teaches important concepts about real estate investing. It provides an excellent opportunity for parents to teach about passive income creation, the role the bank plays in our lives, basic investment concepts, goodwill, etc.
2. The Cashflow game series:
Designed by Robert Kiyosaki, these games were designed to improve financial literacy for both children and adults. In total there are 3 games that are increasing in their degree of complexity:
A. Cashflow for Kids:
Designed for young children, it provides basic teachings on income and expenses, active and passive assets. Using different colored tokens that are placed on a fictitious account statement, the child learns important lessons such as not spending your money on outgoings rather than income. During the course of the game, players transition from living on a fixed salary to achieving financial freedom. It is not the one who accumulates the most money who wins, but the one who manages to get out of the "rat race".
B. Cashflow 101:
Build on the same precepts as the previous game, only it is much more complex. It's actually an accounting course "disguised" as a game. Although the game is recommended for ages 14 and up, I would say it is for ages 10 and up, depending on each child.
However, this game is not just for children. For adults it is an entertaining way to learn to invest and it also reveals important flaws in their mind about money.)
C. Cashflow 202:
Same as above, only more complex. It incorporates much more elements of real life.)
3. K'BBAN:
It is a game very similar to Cashflow games, made in Mexico. (http://www.kbban.com.mx)
4. Game and Learning of Condusef (National Commission for the Protection and Defense of Users of Financial Services, Mexico): Free online educational game for children. It is a game in which your children can learn basic financial concepts..
