Why should Warren Buffett be the authority on teaching children financial literacy? It turns out that it was from my own experience. He opened his first business at the age of six yearsbuying a six-pack of Coke for 25 cents and selling single cans for 5 cents. As he himself recalls, his father taught him financial habits from an early age.
This prompted the billionaire to reflect on today's parents and their mistakes in communicating with children.
A child absorbs like a sponge
When asked what the biggest mistake parents make when talking to their children about money, Buffett answers without hesitation: “Sometimes parents wait until their children are teenagers before they start talking about money management.” And they could start when their children are in kindergarten.
The legendary investor refers to research that clearly shows that up to 80 percent the brain continues to develop until completion third year of life. Further scientists prove that a child, even just a few years old, can correctly predict basic issues related to the behavior of capital.
— Most parents already know how important it is to teach their children about money and how to manage it properly. But there is a difference between knowledge and taking action, practice – suggests Buffet.
According to Buffett, preschool age is appropriate for implementing financial literacy
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Buffett's lessons for young people
In 2011, Buffett participated in the creation of the animated educational series “Secret Millionaire's Club”, in which he acted as a mentor for young people. Each episode is a separate lesson about finance, from what a credit card is to tips on investing wisely.
How to teach your children about money? Here are some ideas from Warren Buffett: :
- Teach children to think outside the box
- Ask the children to paint a picture without using a brush. Challenge them to look for things around the house that they can use to create their creation. This will teach them to think critically.
- Let them give a second life to old home appliances. A chessboard made of bottle caps, an umbrella stand made of old buckets, etc. Let them know how to save money and take care of the environment.
- How to distinguish price from value
- Have fun with the online comparison tool. Write down what you need to buy for home right now (e.g. bread, yogurt, eggs) and look for differences in prices of the same products.
- Analyze advertisements with your children. Ask them: what is being sold? What is the message of the ad? Do they feel confident in making the purchase?
- How to save money
- Let children have two money jars – one for spending and one for savings. When you give me cash, talk to them about how they would like to split it and why.
- Ask your children to create a list of things they would like to buy. Then discuss each item, indicating whether it is a want (like a new toy) or a need (new pants or a backpack).
There can be many ideas for playing budget management. The most important thing, however, is what Buffett has been saying from the beginning:
Remember, it's never too early.
Source: CNBC.com
