Experts are unanimous when talking about the starting point of a child’s financial literacy – the earlier a child understands the essence of money and learns to use it, the easier it will be for him to integrate into society in the future.
A child’s first toys also teach financial literacy
It is often believed that a child can start learning financial literacy when he learns to count at school. However, medical psychologist-psychotherapist Viktorija Bartkutė-Vyšniauskienė claims that a child’s first acquaintance with money happens in early childhood.
“From a young age, children play with toy cash registers or card readers, learn to count by placing cubes with numbers drawn on them – all this indirectly teaches the child the basics of finance. Also, a child probably gets the most information about money by watching his parents, for example, how they discuss planned purchases in the family”, says V. Bartkutė-Vyšniauskienė.
According to her, the most important task of parents in teaching their child financial literacy is to present information easily and comprehensibly, using the form of a game. “Often, children who receive their first pocket money do not yet know how to count. Therefore, it is most effective to tell the amount of pocket money to the child by explaining how many and what kind of things he can buy for the exact amount”, says the psychotherapist.
Romas Čereška, head of Citadele Bank’s Baltic funds management and trade financing service, seconded her, adding that the beginning of giving pocket money to a child should be determined by an open conversation between the parents and the child about money.
“It is important to mutually clarify the essential principles of what both parents want the child to learn. This will allow you to focus on the methods most suitable for achieving the goal. Before starting to allocate pocket money, you need to talk with the child about what he would like to buy with this money, as well as ask to find out, for example, how much food costs in the school canteen, and together determine the amount of the weekly budget. It is also important to agree on the most convenient and safest payment method for the child and to learn how to use it,” says R. Čereška.
Company photo/Romas Čereška
He adds that it is important to understand that mistakes may or may not be avoided, but it is an integral part of the learning process for both the child and the parent.
What if I overspend or spend inappropriately?
If the parents, after starting to give pocket money, noticed that the child is not spending it the way the parents would like, the interviewers first advise to calm down and evaluate the situation objectively.
“We probably wouldn’t find an adult who has never made a pointless purchase or looked forward to the next paycheck. “Too fast” doesn’t always mean “wrong”. For example, a child received 10 euros for the week on Monday – he spent 8 euros immediately for the needs of the week, and put the remaining 2 euros in a savings account. It would seem that the pocket money was spent very quickly, but it was also set aside for saving – this is an example of a child’s responsible financial behavior,” says R. Čereška.
He adds that parents can also misjudge the things a child buys, but it is important for them to realize that a seemingly worthless toy bought by a child can be extremely popular with his peers and help him feel part of a group. However, if you notice that your child spends too much pocket money and runs out of it during the week, parents should have an open discussion with their child about the pocket money system.
“If the child does not comply with the agreement, exceeds the spending limit or behaves irresponsibly with the money received, it may be appropriate not to give the child pocket money for a while, not to give more or more often than was agreed. It is necessary to calmly explain that it is extremely important to follow the rules and the agreement with parents regarding the use of pocket money”, says psychotherapist V. Bartkutė-Vyšniauskienė.
The representative of the bank seconded her, adding that instead of punishing the child, it would be better to strengthen the trust between the parents and the child and for the parents to try to better understand the child’s world. It is extremely important to openly share your experience with your child, how the parents managed to stick to the budget that week and set a good example.
What amount to start with?
According to experts, there is no specific amount of money to start with when allocating pocket money. It all depends on the family’s income and capabilities.
“The most important thing is to focus on the final goal – the child must learn the basics of responsible behavior with money. Therefore, even with a few euros a week, a child can meet his needs both by purchasing something and by putting part of the money in the savings bank,” says R. Čereška.
However, this year’s Citadele bank survey* revealed that Lithuanian respondents tend to give their children the most pocket money among the Baltic countries – from 10 to 19 euros per week (29%), while in Latvia (29%) and Estonia (33%). ) most of the respondents indicated that they give between 5 and 9 euros per week.
According to the survey, every third Lithuanian (28 percent of respondents) gives pocket money to their children. Lithuanian parents’ pocket money is mostly used to cover small daily expenses, such as school lunches (59%), snacks (24%) or school supplies and stationery (14%).
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2024-08-28 20:46:32
