Tips to Teach Your Child Money Management
Omolabake Fasogbon
With only 38 per cent of Nigerian adults financially literate, according to the Central Bank of Nigeria (CBN), a situation said to have fuelled the challenge of hardship and poverty in the country, enhancing financial knowledge of individuals remain utmost importance.
Financial literacy described as cognitive understanding of financial components and skills such as budgeting, investing, borrowing, taxation, and personal financial management, is recognised as the stimulant to a healthy financial status for individuals and companies alike.
Knowledge of financial knowledge certainly have affiliation with economic growth and buoyancy, unfortunately, not a few are counting their losses from poor choices due to ignorance and illiteracy that could have been prevented with simple knowledge.
A report by Norrenberger Financial Investments Scheme revealed that as of 2022, Nigerians lost over N300 billion to Ponzi schemes in five years.
A Finance Coach, Christine Vihishima, believed that the unfortunate incident was due to inadequate understanding of money among the populace.
But Chukwuma Aguwa, noted that the worrying trend of financial illiteracy among adults may not be unconnected to the fact they are not caught young.
“Many young people go into adulthood with little knowledge about financial management and they end up making mistakes that cost them a lot of regrets in the long run.
“Educating young people about the importance of financial management and making sound financial decisions will go a long way to prevent them from making costly mistakes. This will also encourage them to be financially prudent when making decisions.”
In a nutshell, Aguwa is advocating financial literacy skills from childhood to grow with it.
Like Aguwa, Co-founder of 9ijakids, Titi Adewusi, affirmed that financial literacy would empower individuals to break the cycle of intergenerational poverty by being equipped with relevant skills to improve their economic prospects and alleviate poverty.
On catching children early, she said, “They will be accustomed to good financial habits from an early age. Imagine having 1 million financially literate children in Nigeria, we will definitely be able to end poverty and inequality in Nigeria”.
Thus, as Nigeria joined others across the globe to mark 2024 Global Money Week, recently, THISDAY brings some useful tips to guide children through money management as culled from an alternative investment platform, Grip Invest:
Introduce the Concept of Money
Teach your children about the concept and value of money from an early age. Explain how different denominations work, as well as how money can be exchanged for goods and services across various life scenarios. Taking your kids on a trip to a grocery store could be a great start for this.
Introducing your kids to the ideas of short-term and long-term financial goals can go a long way in helping them plan out their finances when the time comes. While short-term goals should cater to their near-future plans like going on a short trip or buying a gadget, long-term goals usually revolve around significant milestones in their life, like getting married or saving up for retirement.
Teach the Concept of Savings
Enable your children to save money for their goals. This will help them understand the value of delayed gratification as well as the power of savings. Teach them to save a part of the money they receive, and help them buy toys or goods they would love at a later point using the savings. Using the traditional piggy bank might prove to be an exciting way of building on the habit of savings. You can also check out interactive apps and software that let kids enjoy the piggybank experience at their fingertips.
Tell your children that it is okay to wait for something they want instead of getting it immediately. Such lessons would teach them the values of patience, inculcate discipline in them, and establish a feeling of achievement when they achieve the long-desired goals that they worked for.
Budget Cashflows
Teach your kids that cashflows are a finite resource that needs to be budgeted wisely. This could also help them understand the concept of spending money on their wants rather than their needs. Also, teach them to track their expenses and budget their allowances/pocket money based on the same.
Personal Finance Content for Kids
Kids love learning from interactive content sources, be they illustrated comics or video presentations. You can buy personal finance books that are specially designed for young minds, or you can make them watch personal finance videos that are easily available on the web. This will help them develop the habit of reading up and keeping updated with financial news and strategies.
Be a Role Model
Children learn from what they see more than from what they are told. Demonstrate good financial habits such as budgeting, saving, investing wisely, and avoiding impulsive spending decisions. Involve your kids in decision-making processes and value their opinions. These lessons would carry bigger value when they see them being implemented by someone they look up to.
