Editor’s Note: What can you do to teach your kid financial literacy? It’s a question we often get from concerned parents. Here’s our answer.
First, your lessons have to be simple. Even adults glaze over when you talk about interest rates, fees, loans, etc.
Second, your lessons have to fun. I’m not going to go into the psychological studies of how making an activity fun drives learning, but remember that lecture you dozed off in in uni? Yeah? It’s just like that for your kids.
And that’s two of the biggest reasons why most financial literacy classes fail. And also what the people at Kids @ Switch solve best. They make financial literacy simple and they make it fun.
Today, we have one of them, Eugene, the Chief Creative Officer, to talk about the issue. If you have a kid, listen up. Enter Eugene.
Parents. Carers. Teachers. Lend me your ears. Piggy banks aren’t real world…
The piggy bank – part toy, part tool, not always in the shape of a pig – is often the first object most parents pick up when they want to introduce their children to money and finance.
But, how effective is it in promoting financial literacy?
The piggy bank is deceptively educational. Without a doubt, it instils a value – the principle of saving – but it falls short by not giving kids the chance to get a taste of the real adult world of money, which requires more than simply putting some money away in a box or even a bank. It’s about the attitudes we, as adults nurture in kids.
For many of us, financial literacy is a journey that evolved with age – though is not necessarily the most effective method of education.
I’m Eugene, the Chief Creative Officer of Kids at Switch – an educative playhouse in Sydney’s suburban Chatswood that is teaching kids the awareness of financial literacy and turning their passions into their own, intrinsic purpose.
I am not so much here to sell our business, nor am I here to provide some one-stop solution to teaching kids how to save money. I’m here to tell you how important it is for kids to understand the value of money, and how these ideologies are fostered from a young age – and what role you play in shaping their futures as global citizens.
Growing up, I never had a strong perception towards the value of money. It was either there or it wasn’t. Of course I had the basic understanding that you had to work to get money – that much was simple.
But how did people manage their money? This was a question that perplexed me for a very long time; long until well after the age of eight, which is where studies have shown one’s monetary perceptions to be set in stone.
In our constantly changing world, and as we approach a new era of technological advancement and population growth, not only I, but YOU have the responsibility of teaching your own children, or at least those whom you are in close contact with, the undeniable importance of being financially and entrepreneurially literate. Our kids need to be prepared for jobs that don’t exist yet – they need a mindset disciplined enough to know where to go, and how to get there.
Financial cautiousness is key to this.
How to teach your kids about money
At Kids at Switch, we teach our kids how to do real-world finance – how to earn money, how to run a small business, how to negotiate business deals and how to save for their future. We replicate what happens in our adult lives. All in the form of Play.
Gone are the days when property was passed down from generation to generation, gone are the days when there were jobs aplenty – we need to teach our kids how to manage their money prudently from an early age so that they are able to find a place to live, be competitive in their workplaces and more importantly live with their passions in hand, certain that they can succeed in light of an uncertain future.
What I’ve discovered in my journey at Kids at Switch is that kids are innately entrepreneurs – with huge imaginations and a born-understanding of self-interest.
Remember how you felt when you didn’t get the ice cream and your brother did?
Children are malleable and can learn so much more about financial literacy than what the piggy bank has to offer. The onus is therefore on us to mentor and help them along their journey. What we do is give kids the right tools to harness these raw talents for creativity and serving their passions – and turn them into business skills – core attributes needed for their future financial wellbeing as adults.
The things that work:
Everything is a game – with a lesson…
We want our classes to inspire creative, critical and logical thinking, which has a long-lasting impact on a child’s behaviour and gives them valuable life skills to make the right decisions.
This is much more effective than touching on their short-term memory with a manual of steps and definitions. We teach them to budget, as well as to never give up. We have lessons on ‘paying yourself first’, but also on dreaming big. Our student Kade has already demonstrated this degree of critical thinking, taking his entrepreneurial skills very seriously.
Kade has started drafting out a contract and agreement for his day-to-day leisure activities with his mother:
Let kids invent to save the world
This is especially important in an increasingly competitive and confusing financial market, where there is an abundance of information, goods, glam and failure.
Our students Adeline and Divyesh – who at the ages of six and nine respectively published their own short stories – are testament to this method of teaching. Along with many of our kids who are part of a mini-economy and regularly come up with innovative solutions to the problems we throw at them, they prove that children can achieve A LOT regardless of their age.
All they need is the right set of skills and attitude, and a great support network on their side.
Use the words you use about money
Tell your kids about the expenses of the future, the responsibilities of life and the complications of money early – rent, profit, wages, interest, investment, donations, taxes – all necessary evils that needs to be grasped by kids before the future begins its toll. No child is ‘too young’ to understand the concept of interest and taxes. We’ve even had our kids thoroughly debating the pros and cons of the GST during one of our play sessions.
This is a barrier parents face when discussing financial ideas: it pulls kids away from reality and distorts their perception of monetary value at an early age. We need to remove this barrier, and expose them to financial issues they will experience later in life, whilst nurturing their mindset to become resilient, hard working, innovative and entrepreneurial.
Improving the quality of our children’s future lives is something we all need to work towards. We can’t apply the antiquated education system to teach kids about a rapidly evolving future. Nor can we wait for it to catch up either. We need to bite the bullet and throw away the rusting piggy bank – savings need to be taught in a more practical way.
About Kids at Switch
Kids at Switch; a unique financial education program is revolutionizing the way children learn. Designed for primary school students, this modern day fun and educative ‘playschool’ provides a unique platform for children to collaborate with peers and solve real- life problems within an interactive and stimulating environment.
Unlike any other educational program, Kids at Switch enables children to accelerate at their own speed, dictate individual financial and learning goals, and create their own success stories without the fear of falling behind. Charged with daily expenses including rental fees of desks and chairs, this novel and educative program fosters financial literacy and empowers our children to make conscious money decisions.