Are your children financially literate? Contributed by Nimi Akinkugbe, Money Matters with Nimi
Our current educational system focuses almost totally on academic subjects and very rarely is any aspect of money management taught in the school curriculum. This is set to change in due course.
At an event to mark Global Money Week held at Abuja in March 2014, the Central Bank of Nigeria (CBN) announced that the curriculum that would be used in Nigerian schools to teach the concept of financial literacy would be released next year. Global Money Week is a global money awareness celebration that takes place in March each year to engage children globally regarding the basic concepts of savings and investing.
The CBN in collaboration with the Federal Ministry of Education, the National Education Research Council, as well a financial literacy steering committee including stakeholders in the capital markets, banking, insurance, and pensions industries seeks to ensure that financial literacy is integrated into the Nigerian school curriculum by 2015 to better equip students to manage their finances in adulthood.
Nigeria is not alone in this drive for financial literacy among its youth population. Children will be taught how to manage their money in schools for the first time in England, after financial education was included in the national curriculum towards the end of 2013.
The details published by the UK Department for Education includes “financial mathematics.” According to the published curriculum, pupils will learn to manage their money and plan for future financial decisions in citizenship classes, which will also include instruction in financial products and how public money is raised through income tax. The curriculum will be rolled out in the United Kingdom from September 2014.
Parents have a role to play in encouraging financial literacy among their children as the most practical and profound lessons are at home. They often ask about the age when they should start teaching children about money, or whether or not they should give their children an allowance or pocket money.
To raise money-savvy children, parents should start to teach from the time a child can count and regularly reinforce money lessons as children grow up. An allowance puts money in your children’s hands and presents and opportunity to introduce budgeting and prioritizing. Opinions vary as to whether or not they should be given an allowance. Some argue state that it gives them unrealistic expectations and develops in them a sense of entitlement to be given money for doing “nothing”.
Some parents go as far as to introduce commission based work for chores. Certain tasks at home are thus assigned naira amounts and if the job is done very well, they are paid. If they don’t do the job well or display a bad attitude are unhelpful then any payment is withheld. One wonders if the payment for chores won’t make children tie monetary compensation to everything that they do.
When your children earn or are given an allowance, help them to divide it into three tiers: saving, spending, and giving. By guiding them through these concepts of saving, spending and giving you’re laying a foundation for their future financial security.
Children can start to learn the virtues of work from a young age. One must make sure that the jobs that they do are age appropriate. Even the youngest children can do minor tasks that keep them engaged and provide useful learning opportunities.
As children get older, they are introduced to debit and credit cards. Indeed, as soon as they arrive at some university campuses, they become the target of financial institutions some of whom are keen to introduce debt very early in their banking relationships. They must be taught the pros and cons of both. If your children become prone to debt from an early age you can be certain that you will be spending much of your retirement years bailing them out of financial difficulties.
Are your children at home on holiday now? This might be one of the best opportunities to put some financial principles their way. Our children tend to imitate our money habits. They see you working hard so why not put them to work for at least part of the long holiday. This provides a valuable lesson that work is how money is earned.
When it comes to earning, saving, spending and giving, try to involve your children as you plan your basic household budget. Take young children to the supermarket with you. Let them watch the process of selecting various items and how much they cost. Let them make some choices to learn what is expensive as compared to what is more affordable.
Discuss with them where money is going and what your priorities are. They should also make their budget and prioritize between their wants, and needs. Sometimes it is difficult to explain things but practical exposure to paying utility and other bills can become powerful learning events. These will be long lasting lessons in how they manage their own money.
We all know how much better off we might have been if we had learned the basics of personal finance when we were much younger. Good money habits, learned early in life can help to insulate children from making mistakes later in life. Why not give your children a head start by introducing some of the principles to them now. They will be so much better for it.
Nimi Akinkugbe, Money Matters with Nimi , is a Money Management and Financial Specialist. Website: www.moneymatterswithnimi.com | Email: [email protected] |Twitter: @MMWITHNIMI | Instagram: MMWITHNIMI | Facebook: MoneyMatterswithNimi