“The early bird catches the worm” is a proverbial assertion that applies well to financial literacy and its management. No wonder it is not surprising that by age seven, most children, according to research, already have an idea of how money works.
To succeed in life, individuals are most times advised to start early; while assisting your little ones acquire necessary skills at either sports, entertainment, or academics, parents, in most cases, overlook the necessity of financial literacy.
If you don’t teach your children how to manage their finances, torrid situations would. And that is not a risk you would wish to expose them to.
If you want your children to be prudent with money, it is your responsibility to expose them to its value as soon as they are able to count. It is in this light that BizWatch Nigeria presents how parents can give their children the head start they wish they had and set them up to win big at any age.
Teach them without work, there can’t be earnings
This is an important stage in their journey to gaining financial confidence. Children from the age of three to four can start learning this concept. For them to value money, you need to start rewarding them for completing certain tasks, which may include errands, and cleaning chores. No matter how little the financial reward is, by rewarding them for little tasks, you are as well telling them that to earn, they have to work.
Help them develop a savings character
As your children continue to earn money, it is normal for them to understand the value of different things in life. While some of them would require more money from you to buy toys, others may prefer to constantly settle for biscuits and sweets. And when they start developing the spending attitude, you need to bring the piggy bank home for them to slide their notes.
Allow them to learn from their spending culture
What your child chooses to do after earnings is his or her first financial decisions. Ordinarily , kids who are exposed to the aforementioned are expected to be mindful of how they spend. You don’t have to be all over them all the time in order to ensure that they make smart financial decisions.
Sometimes, it is okay to give them the freedom to make decisions as it relates to their finances so that they can learn from it. For instance, they may have been saving up to buy a video game, which may not sound smart to you. Your opinions may not be needed as the game is important to them. So, keep it to yourself.
Help them demystify needs from wants
As parents, it’s important you help them understand that wants and needs are not the same. Hence, they need to be thoughtful when it comes to making decisions on what they intend to do with their money.
This doesn’t translate to forcefully influencing your decisions on them. Let them have the freedom, which would expose them to the consequence of making poor ones.
Your child needs to understand that not being able to differentiate his or her wants from needs, would attract consequences, which may be good or bad.
Let them understand how to budget for things and why
To avoid falling into debt and being able to achieve desirable things, your kids need to cultivate the habit of planning, which would influence their decision to budget for things they want or need.
For older kids, maintaining an excel sheet can be the way to go. There are multiple apps as well that allow you to record your monthly expenses and provide a detailed report on where your hard-earned money was spent.
With this approach, you can easily set apart an amount of money, and plan on how long you would do that for fulfilling a purpose or purposes as the case may be.
Expose them to investments
While you didn’t start your financial literacy journey on time, avoid such mistakes with your kids. This is why your parenting style should include exposing them to different avenues of investments.
Mind you, investing your earnings is not the same as saving them. For instance, simple options like opening a fixed deposit or a recurring deposit is a great way to teach them about multiplying their money. You can also introduce them to stocks, bonds and now even cryptocurrency.
Teach them learn about risks
Having realized how to make money, spend, and put it to work, it is important for your kids to know that their financial decisions are subject to risks. You need to help them understand what they risk when they are considering certain investments, or not making investment plans at all.
