Raising Financially Responsible Children
Were you taught how to be financially responsible as a child? Who taught you, your teacher or your mother? Many people learnt in Economics, and all that they learnt is opportunity cost. Truth is at that time, it was almost late to change anything. Have you ever wondered why many businesses die off once the owners are gone? Don’t you ask, like me, where are their children? So, how can we ensure that we do not make these “financial” mistakes with our own children?
Do not think that they are too young; find ways to slowly send in the financial management into their heads. There was this joke about a young boy who was asked to add 2 plus 2, he was not able to but when asked to add N2 plus N2, and he knew what it was. Your child is old enough to ask you for things that cost money? Teaching about money is not so complicated. Tell them what money is, the denominations of currency, the value of money and how to count money. That’s the time to start teaching them. If they can count, then they are old enough to learn about money.
How can you?
Make them know that money does not grow on trees. You work, then, you get paid. It should be saved and spent wisely. As they grow older, you can give them an allowance. Make them know that they are able to buy toys because Daddy and Mummy plan how to spend their salary so that it goes round to every member of the family and everyone is happy. You can start by telling them how much their toys cost and by buying them affordable ones rather than really expensive ones. For instance, if your son wants a toy that would cost N5, 000 let him know the value of N5, 000 for the family. Perhaps, he will change his mind.
Set Financial Goals together
This can be done at any time of the year. Just as the whole family plans financial goals for the house; if things are going to be tougher in the year because of investments on the new house or car, make them know why. You can also help them plan towards that new novel or movie that they want to buy. They may also want to save towards opening a “Back to School” account. The goals can be long or short term. This can actually be a lot of fun and could also be a way to bond with your child, to know what is going through their minds and what they really want! Gradually, you begin to give them tips on investing.
Budgeting and Saving
You can start small, depending on their ages. It does not have to be complicated. Find ways to tell them that money spent never returns to you. Well reminds me of something about humans, it is only what you have in your stomach that is really yours. There are ways you can begin to teach them about income and expenditure. You can help them keep a book where they write what they spend money on. You can teach them that it is better when the income is more than the expenditure. One way to achieve that is saving. You will realise that when they want things sometimes, they would gradually take from the money that they’ve saved rather than asking you.
Oh yeah, you read right. One way that they can get the best of whatever thing they need is bargaining. Teach them how to search for the best offer and not just jump at the first offer. Teach them to value quality over quantity. Easy way to do this is, once in a while take them to markets or supermarkets. Show them how it is done. Show them what to look for in quality. I guess what age to start this depends on you! Then, whatever they save from a good bargain, they can save towards an investment, however small.
Maybe the best way to do this is to show through the simple words; everywhere your money goes to is an investment. The question now is whether it is good or bad investment. However, one way to keep money aside for investment would be by telling them to get the best bargain. You can show them shares certificates; explain what they can understand to them in simple words. You can use the basic things to explain what things like, dividends, bonus mean. Saying something like this could help: imagine that you own a company; you sell “shares” to people so that they can invest in your company; then the money they give you, you use it to work and make profit; whatever profit you made is given to the shareholders as “dividends.” You can use the names of the members of the family to explain. To top it all, and make your child feel good, you can buy help them buy shares from their savings. They will thank you later. But that would be after a heart-warming smile on their faces. The older they grow, the more the responsibility.
And yes, I forgot one thing, you cannot give what you don’t have. You need to be at least a little interested in financial management. It’s good for you and your children!
What do you think? Any more tips? What works for you?
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