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5 Tips on How to Raise a Financially-Savvy Child

Savings, Thrift & Investment	1861 VIEWS
Savings, Thrift & Investment
1861 VIEWS

Saturday, December 12, 2020 / 02:00PM / Grace Adejare-Ajuwon & Chinyere Onyia for Proshare Finance / Header Image Credit: Greater Alliance

Parenting is quite interesting and equally challenging; just like every other facet of one's life one have to master through an experiential journey. While every parent desire to raise a physically, mentally, and emotionally fit child, it is equally important that they pay attention to, and ensure the child(ren) is financially aware and grows up to have a prudent and conscious relationship with money. Indeed, the goal is to educate, enlighten and empower them to be aware of the basics of making, managing, and multiplying money; a goal our personal finance section is focused on, acting as a companion and aide memoire for these discerning parents.

The first step to raising financially aware children must be the maxim - "Start Early". To achieve this, one must start early through mentoring and the introduction of money lessons as well as the implementation of financial literacy tips into their daily routine. Below are some tips on how to commence this journey.

1. Enlighten them about Money, keep their imagination alive

Talking to kids about money can be a herculean task but it can be done by just having simple conversations around the things that happen daily. For example, you can start with showing them the various currencies that exist and explaining the value of each; taking them with you to buy their favourite toys or edibles and helping them learn that money is what is given in exchange for the items purchased, etc. Make them see that if you do not give money in exchange then you cannot go home with the things bought. With this, they can quickly understand the use and importance of money.

Regardless of the method, you adopt to have these conversations, you should take cognizance of your child(ren)'s age and what they can easily assimilate. As they grow, you can introduce the principles of managing and multiplying money effectively using financial products and services.

2. Engage them in Money Games and let the excitement flow

Finance might seem boring especially for young ones, so it is important to make it interesting and fun to get their attention. An easy way to do this is by allowing them to play money games either online or offline. You should also make effort to participate in these games with them, so it is easy for them to recall the experience and learn from the same. One common money game that remains valuable in helping children learn about money is Monopoly.

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3. Educate them about Ways to Earn and Utilize Money effectively

Money lessons regarding how to earn and utilize money effectively should also be taught to ensure your wards are financially literate. In educating them about money lessons you can use yourself and your spouse as examples. For instance, tell them about what you do and what you get in return. Involve them in the money decisions made at home while explaining to them the justification for those decisions. e.g., the decision to buy what they desire immediately they request for it or later.

You can also encourage them on ways to earn by giving them money in return for work or tasks executed while helping them appropriately plan the use of their allowance by distinguishing their wants from needs.

Just like adults, children will make mistakes using money especially their allowance. As parents, remember these mistakes are lessons, less expensive lessons if they learn them now when they are younger. If you notice they are becoming spendthrift, call them to order and guide them on how to spend wisely, also let them know the cons of unwise expenditure. You can make this possible by telling them stories about some of the money mistakes you made and the negative impact they had on you.

4. Encourage Budgeting & Sharing, and Make Sense of Planning

Budgeting is a good way to teach children how to manage their finances at an early age. As it will assist them to know where money coming from, where it is going, and how to meet their goals based on their values. To guide your kids on budgeting you need to ask them questions such as: What are your goals? What do you need and want? How much will it cost to meet these needs and goals? How long will it take to save the money you need to reach your goals?

How much money will go to spending, sharing, and saving? Assist them in answering some of the questions that way they learn and when next you ask them the same question; they will be able to give answers on their own without your assistance. Also, direct them on how to create a budget sheet with a pen and paper. That way they learn how to budget and track their expenses. Responsible and prudent Sharing or Giving should also be a part of the lessons taught to nurture in them the attribute of generosity and empathy

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5. Exemplify Saving & Investing, Give Keeping Money a Good Name

Studies have shown that children learn faster by observing the world around them. They often also imitate what parents or other adults do. Thus, in helping your child become financially savvy, you should walk the talk by utilizing your money wisely, while helping them see how you make decisions about earning and spending your money. Since you understand the importance of saving, you should also help them learn to save as well by opening a children's saving or investment account for them and helping them see how the monies saved grows. This also enables them to appreciate how technology aids transactions.