Celebrate National Children’s Day: It’s Time for Kids to Become Financially Literate!

For nearly half a century, Indonesia has celebrated National Children’s Day every July 23rd. This moment should serve as a reminder that children are not only the future of the nation but also the leaders of their own lives.

That’s why every child deserves proper life preparation—not just through formal education, but also through practical skills they’ll need in everyday life. One of those essential skills is financial literacy from an early age. Since this subject is still rarely taught in schools, parents play a vital role in introducing it at home. How can they do that? Find the answers here.

Understanding Financial Literacy for Children

According to Investopedia, financial literacy is the ability to understand and manage money wisely—from saving and distinguishing between needs and wants to making financial decisions. Although it may sound like something only adults deal with, this skill is actually important to introduce to children from an early age.

Children who are taught financial concepts early on tend to grow up more confident and are less likely to develop impulsive spending habits. They learn that money doesn’t come easily and that every financial decision carries consequences.

More than just numbers, financial literacy is a life skill that helps shape children into wiser, more independent individuals who are better prepared to face real-world risks.

5 Financial Literacy Principles Children Should Learn

To help children truly understand how money works, they need to be introduced to the basic principles of financial management. Here are five core principles of financial literacy you can use as a guide:

1. Earning

Children need to understand that money doesn’t grow on trees—it’s earned through effort. You can start by introducing the concept of rewards, such as giving them extra allowance after helping with household chores. This teaches them that effort is required to earn money. The more they understand the process, the more they’ll value the money they have.

2. Saving and Investing

Children should learn that setting aside part of their money for the future is a valuable habit. Teach them to delay gratification so they can buy something more meaningful later. For older kids, you can introduce simple savings products with interest to help them understand the value of growing their money. This builds a long-term mindset and the patience to manage desires.

3. Borrowing and Managing Debt

Even though they’re not dealing with debt yet, kids can still learn about the consequences of borrowing. For example, if they borrow money to buy a toy, their allowance gets reduced until it's paid off. This helps them understand responsibility and the importance of knowing their ability to repay before taking on debt—an essential step toward careful financial decision-making.

4. Spending and Planning

Children need to know that every spending decision should be thought through—not based on impulse. Encourage them to reflect before buying: “Do I really need this, or is it just a momentary want?” This principle helps them distinguish between needs and wants, which is key to making smart financial choices.

5. Protecting Assets

Although it may sound complex, children can be taught to take care of their belongings to avoid damage or loss. This is an early lesson in preserving the value of what they own. Over time, it also lays the foundation for understanding the importance of financial protection, such as emergency funds or insurance.

How to Teach Financial Literacy to Children

National Children’s Day is the perfect moment to go beyond just teaching financial concepts. It’s a great opportunity to let children experience money in real, practical ways so they can truly internalize its value. Here are some everyday strategies you can try:

1. Introduce the Value of Money Early

Children need to understand that money doesn’t just appear—it must be earned. Giving them a regular allowance is a great start, especially if part of it is tied to completing household chores.This teaches the connection between effort, responsibility, and reward. Spending money they earned on their own also feels more meaningful than spending money that’s simply given.

2. Teach That Money Doesn’t Have to Be Spent Immediately

Help children understand that money isn’t only for spending—it can also be saved or grown. This encourages them to delay gratification for more meaningful goals. Such habits form the foundation of long-term financial thinking.

3. Create a Savings Book for Your Child

Open a child-friendly savings account or create a simple “manual savings book.” Let them record their pocket money income and daily spending. This builds discipline and instills a habit of tracking money responsibly—plus, it makes abstract financial concepts more tangible.

4. Introduce the Value of Sharing

Encourage your child to set aside part of their money for others—whether through donation boxes, charity, or small acts of kindness. This fosters empathy and social awareness early on. They’ll learn that money can be a tool for doing good, not just personal gain.

5. Help Your Child Plan Their Spending

Involve your child in creating small budgets—for example, planning to buy a toy or a birthday gift for a friend. This strengthens their logical thinking and shows the importance of financial planning. The more they practice, the more confident they become in managing their own money.

6. Let Them Try a Local ‘Summer Job’

For older children, offer the chance to do small money-making activities—like selling cookies, helping with the family business, or shadowing a parent during school holidays. These real-world experiences teach the value of hard work, earning, and entrepreneurship.

7. Involve Them in Your Small Business

If you run a home business or small enterprise, involve your child in simple tasks like recording sales, packing items, or helping with promotions. This gives them context for financial literacy and a close-up view of how money flows in real life—profits, losses, and everything in between.

To be a strong role model, you as a parent also need to demonstrate good financial habits—especially when running a business. One way to do that is by using professional tools like Labamu, a business management app that helps you stay organized and make smarter financial decisions. It’s not just practical—it gives accurate results that can guide better planning.

Download Labamu now on Google Play or the App Store and start managing your finances like a pro!