Do you wish you had learnt how to handle money earlier? Maybe it is our children who will not have to lament about that. The earlier the better. We run financial literacy programs for kids and many parents have asked us what they can consistently do with their children at whatever age to instill the right principles. Here are five things that can get you started.
1. Let them earn it.
The mistake many parents are making is giving their children money without making them work for it. There are some children that are given the kind of money that could be somebody’s salary. This develops into a very dangerous kind of entitlement and inability to appreciate the value of money. Outline specific chores/activities for them to do to make money. Wash the car, gardening, cooking, cleaning. With older kids stretch the boundaries of these things beyond the house and in fact let them give you ideas on what they can do to earn money. They are never too young to start. Even if they can’t count money, the concept of working to earn it can still be introduced.
2. Let them spend it.
One thousand shillings only has some value because you associate it with something you can buy. You know what it can do because you have experienced spending it. Many kids don’t actually know what things cost. One of the exercises we make kids in our program do is to put a value on what their upkeep costs as one of the ways to get them to appreciate money. Go to the shops with them. Let them buy something with their hard earned money. Let them even see the things they can’t afford. My son was once mortified to realise that the toy he wanted would cost a lot more than the two hundred bob he had earned. Let them experience this limitation so they understand what they actually have to do. Even though you can, do not rush to save them by topping up what they don’t have.
3. Teach them to save.
Let them learn not to spend it all. If more of us had learned to save early, we would have avoided a lot of problems. If we can teach this to our kids, it can become the norm for them. This is essential in a world that is constantly idolizing consumption and not retention. This is even more powerful if you link the saving to some sort of goal. This has to be their goal not yours so that they own it and they are motivated to see it through. So not only are they learning the foundation of wealth creation through saving but they are working towards something. Do not raid their piggy bank just because you know they have some money. Believe or not many teenagers have confessed to us that this happens and becomes a deterrent for them to save.
4. Teach them to give.
On Sunday many parents give their children offering money for church. Turn this around and let it now be their own money. If you give them ‘money to give’ all their lives, when they do earn their own money don’t expect them to automatically become givers. It’s not about the amount, it is about the principle and instilling the value of giving. This could be to church, a fund raiser, a relative you are helping etc. Don’t limit the giving to just money. Over the holidays, get them to give their time towards something more than just having fun. Let them start experiencing at an early age that they can make a difference.
5. Last but not least, remember they are observing what you do with money and how you talk about money.
Our money beliefs, behaviours and attitudes came from somewhere and usually it is what we saw as we were growing up. Lead by example. Let them see you talking about money and making decisions. Don’t always send them out of the room. Do house shopping with them. If they can let them re-calculate the bill in a restaurant. Let them accompany you to the bank. In summary get them involved. This involvement will also make it easier for them to accommodate any changes in family finances along the way e.g. if you have to cut down on luxuries and spending during transitions like retrenchment, loss of income etc. Another bonus to getting them involved is that it will also make you want to rectify your own money habits. After all you are essentially teaching them how you do money.
Centonomy runs financial programs for teenagers. For more information get in touch Waceke on waceken@centonomy.com|Facebook/WacekeNduati| Twitter@cekenduati