Teaching your children how money works is one of the most important life lessons you can give them, it goes beyond the benefits of naira or dollar.
Money lessons open them up to other useful qualities including responsibilities. Children that learn the art of wealth creation early have been known to be financially responsible, have leadership qualities, are self-disciplined, philanthropic, emphatic towards others, appreciate delayed gratification, and are quick to forgive.
Show by example; remember children learn more from watching you. If you are a bad spender your children will most likely gravitate towards that kind of lifestyle. Show them that the things they have cost money. Take them to the store and let them pay for an item or two from their own money. Not the money you gave them, let them pay from the money they saved or the money they were gifted.
No child is too young to be financially responsible. You can start from age 5.
Talk About Money
In a 2021 T. Rowe Price survey, 41% of parents said they don’t like to talk with their children about money, with many expressing embarrassments about bringing up the topic.
If you want kids to learn about saving, you have to nurture an ongoing discussion. Whether you schedule a regular weekly check-in to talk about money or make money chats part of your daily routine, the key is to keep the conversation going.
Show them how to save and create a weekly or monthly budget. When they receive a cash gift or monthly allowance, work with them to save a percentage of it. You can work with them to create a budget for whatever they desire to buy from their savings or allowance. Let them see the effort and planning it involves.
Help them set saving goals.
Allow them to save for that video game they want, even if you have the money to buy it for them. It helps them to know how long it will take them to reach that goal based on their savings.
Take them to shop with you.
Allow them to calculate and pay for some of the items they want. A lot of kids are excited about this. Create situations where they see something they want and they cannot afford to pay for it. Then let them plan toward it.
Offer them incentives
If your child has set a big savings goal—for example, a fifty thousand naira electronic tablet—you could offer to match a percentage of what they have saved.
You can also offer a reward when your child reaches a savings milestone, a bonus for hitting the landmark.
Give them a stipend for some household chores they do, like washing your car or any kind of cleaning done around the house.
Teach them how to give.
You can take them to a less privileged environment. They need to know they are privileged and they should appreciate it. I once heard a story of a billionaire who took his children to take public transport (popularly called Molue) to a highly-populated area where they have never been before. The children sobered up after that visit when they realized that some people don’t have access to a quarter of what they have. They also learnt to give to the poor regularly from that day.
Be your child’s creditor.
Instead of always paying off what they need at every given time. Borrow them some money to make up for what they want to buy and ensure they pay back. Write it down and let them sign and commit to regular repayment. With this, they will not only learn to live within their means, they will also learn the pros and cons of borrowing.
Share your experience with investment.
If you made a bad investment in the past, tell them about it. So they can learn better ways of investing. They can be your accountability partner. You can co-save with them and let them watch you and you watch them as well. You will be amazed by the tips you can learn from them. Use this opportunity to teach them how to buy into stocks of as little as N10,000 worth, and let them create an investment portfolio. They can see how the stocks perform over time and begin to understand the basics of investment.
Let them avoid impulse buying as much as possible
Children naturally know how to capitalize on impulse buying, especially when it’s not their own money. The moment you tell them to buy with their own money, they don’t want to talk about it anymore.
Discuss how you’re going to pay for their education.
Children aren’t always aware of the financial impact the cost of their education has on their parents. Don’t teach them under emotional stress, discuss with them with an open mind. What I see most parents do, is take out their financial frustration on the children instead of discussing it with them. If you do not have enough funds to pay for their education, get them involved in problem-solving. If you do have money to pay, let them also know how much you had to sacrifice to put the money together.
Discuss how much you’ll need if you have to take a loan and how this will translate into regular repayments for you.
Share with me your experience while teaching your children this week.
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