Pennygem

At this point, your children understand how to earn and save money, budget for the future, and keep their savings safe in a bank. Now it’s time to teach them a little risk. Keep the lessons simple. Let’s talk about bonds and stocks.

🔹Present bonds as the safer option. You’re essentially giving the government a loan to be repaid later. The rate of return isn’t high, and it takes more time for bonds to accrue any real interest. But, short of the government defaulting, there’s far less risk in bonds than there are in stocks.

🔹Associate stocks with higher-risk, higher-reward scenarios. Purchasing stocks means purchasing small shares of a company, where the value of the stock depends on the health of the company. Be sure to hammer home the buy low, sell high mentality, allow your children to make small investments, and allow them to make mistakes.

❗️“Financial illiteracy is a global issue”, comments Alex Mazloom, co-founder and director of MindTreasures, one of the rare non-profits that is working to bring financial literacy education into our schools. Underfunded, underpaid, and overworked, school faculty do not have the resources—or the energy—to teach our children these fundamental concepts. That’s where his organization comes in; they visit schools during class and in afterschool programs to help them grasp the moral, behavioral, and practical concepts of finance. However, the fact that outside nonprofits have to come in to fill the gaps in our education systems is a symptom of a much graver problem.
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❓Read our blog to find out more - link in bio.

Beginning at age 6, children begin to understand cause-and-effect relationships, and that changes the way they perceive money. By this point, your child can probably see that:
✨Money is directly tied to items
✨Parents work for money
✨Money is spent differently (smaller items, like a book, may only require one purchase, while larger items, like a house, require multiple payments)
✨Some purchases are made without physical money

Maybe your child has gone on a few playdates and has noticed that other families have bigger houses and smaller cars, or vice-versa. This can lead to some difficult questions. It’s possible to answer those questions head-on, while building on your child’s financial knowledge.

Introducing differences between types of spending can help children gain an understanding of how others spend their money, while laying the groundwork for building budgets in the future:
🔹Goods vs. services
🔹Needs vs. wants
🔹Short-term vs. long-term goals

💎Apps that can help
We’re about to dive into the world of digital currency, so now’s a good time to bridge the gap between the physical and the abstract. Using allowance apps like PennygemApp while still distributing their allowance in physical money is a great way for your child to make the connection that the numbers on the screen represent real value.

PennygemApp helps children set their money aside for specific goods and services that they want, while parents still maintain full control. Once you feel your child is ready, you can make the switch to digital currency.