Good money habits
What are those anyway?
Money is an important part of our lives. We deal with it every day, it influences almost all our decisions and is decisive for our living conditions. In today’s reality of life, which is characterized by digitalization, social media and rapid consumption, the sustainable handling of money is not necessarily made easier. This is precisely why sound financial education from an early age is so important.
But what does good financial literacy involve? Today, our financial literacy partner Three Coins explains what are the actual skills behind financial literacy?
According to the OECD, financial literacy is the combination of awareness, knowledge, skills, attitudes and behavior needed to make informed financial decisions and ultimately take care of one’s own financial well-being. It is therefore a mixture of (self-)reflection, theoretical knowledge and practical skills that ultimately allows us to go through life without money worries.
10 key money handling skills
All well and good, but what does this mean in concrete terms? Based on an international comparison of curricula and research findings, the following ten important skills can be summarized that make up the financial literacy of children in primary school:
- Know the function and value of money
- Have awareness that money is a limited resource
- Be willing to defer needs
- Be able to distinguish between value and price
- Know the distinction between things you need and things you “just” want
- Know spending preferences and be able to give reasons for them
- Know the basic workings of advertising and be able to resist temptations
- Keeping track of one’s own expenses
- Know different forms of income
- Be able to name short- and long-term savings goals and achieve them
Now, at first glance, this list looks very comprehensive. How are you supposed to teach a child all these skills? The good news is: children learn quickly and they learn primarily through imitation and practice.
For example: Shopping
How to incorporate basic financial literacy topics into everyday life is easier to illustrate with an example. Even when shopping at the supermarket, there are numerous opportunities to talk about responsible money management:
- Thinking out loud: while shopping, explain to your child why you are choosing a specific product option
- Price comparison: compare the prices of a product category and think together about why one is more expensive than the other
- Need vs. Want: Divide your shopping into two categories – which items in the cart do you really need, which do you just want?
- Own budget: give your child a small budget to use on their own when shopping
These examples clearly show that it’s not about teaching theory, but about setting a good example, letting children take part in decision-making processes, giving them the necessary leeway to try things out for themselves – and above all, not treating the subject of money as taboo, but addressing it openly and honestly. After all, financial literacy does not (only) mean being familiar with figures and interest rates. You need more than just theoretical knowledge to handle your own money responsibly. This topic is also about people as individuals, their values, ideas, fears and desires. As a pilot of one’s own money life, it is about changing one’s own behavior in a positive way.
Shaping financial education with Finny
As the first mobile banking app for children aged 7 – 12, the Finny Kids App combines the virtual world of money with tangible financial knowledge and real money in the Finny money box. Children can visualise their savings goals and clearly define the way to achieve them. In doing so, they, like their parents, have an overview at all times:
- How much money is in the savings account and in the Finny bank?
- What has been taken out?
- How much has been deposited or put in?
- Furthermore, children can supplement their pocket money by doing household tasks.
Exciting financial tips help parents in the follow ways:
- Explain to their children in a fun and age-appropriate way where money actually comes from
- How to save, multiply and spend money consciously.
- In addition, parents can quickly see their children’s level of learning and deepen missing financial knowledge here and there.
With Finny Community, grandparents, godparents, uncles, aunts and friends can become part of the Finny family, contribute something to their pocket money and help their children reach their savings goals more quickly.
Try Finny apps now
Three Coins is an independent financial literacy education organization founded in 2012. The vision of the multi-award-winning social enterprise is for people to move through life freely and self-determined with the help of financial education – completely without money worries. To make this a reality, Three Coins works with renowned (inter)national partners from public and private sector to launch various formats, from smartphone apps to classic training courses and e-learning tools. Three Coins’ offering to partners and clients includes consulting, product development and licensing of educational formats in the belief that increased financial literacy is one of the greatest levers for empowerment, poverty prevention and a healthy national economy. For more information, visit: www.threecoins.org.