"Oh, if only I had received financial education, I definitely wouldn't be going through this." Have you ever heard this phrase or something similar? Well, know that it's a great truth. Many parents don't prioritize financially educating their children - and it's understandable, as they haven't had that experience themselves and therefore have no idea how to go about it. However, it's important to understand that talking about and teaching children about how money works is a way to prevent them from falling into debt in the future.
This is because financial education during childhood is a way to ensure that they develop more discipline, responsibility, and the ability to manage their own emotions down the road.
During this phase, when children and adolescents start forming beliefs about money, parents need to teach them how to manage their allowance. Otherwise, children will develop the idea that there's no need to save, and the urge to immediately spend that money will always be present in their minds.
All of this is encouraged when parents explain to children where money comes from and how it is earned.
The Importance of Childhood Financial Education
Financial education can be introduced as early as 5 years old. However, different values should be prioritized at each stage, and the frequency and amount of allowance given to children will vary. This is explained by writer Patricia Lages, who discusses finance and entrepreneurship on her social media platforms.
"The frequency, whether it's weekly, biweekly, or monthly, will depend on your child's age, and the amount will also depend on their age - as well as, obviously, your budget," says Patricia.
Other experts teach that once a child starts understanding what money is and what it's used for, it becomes crucial for them to learn the consequences of their actions. For example, if a child wants to buy a bicycle, parents need to explain that they should save up the necessary amount to make the purchase or come to an agreement about the next allowance.
"You learn to handle money as parents establish clear rules. It's not just about giving them the money and saying, 'do whatever you want.' When they grow up and receive their first salary, they will do the same," says economist and financial coach Andréia Fernanda on the Macetes de Mães channel.
She further emphasizes the importance of setting boundaries and specifying how the child should spend the money. It could be buying a toy, a treat, clothes, or going to the movies. The child needs to understand that if they spend everything at once, they will have to wait much longer to receive the next amount.
"Allowance is the final aspect of childhood financial education. First, you teach your child to make choices, to understand limits, to learn about 'no,' and then you provide them with an allowance," explains Lages.
Before deciding to cut off their child's allowance, the coach advises parents to have conversations with them during adolescence to determine when and under what circumstances the allowance will be terminated. This way, there won't be any frustrations, and the children will develop autonomy to find ways to earn their own money.
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