Teaching children how to manage money is one of the most important responsibilities parents have to perform. In today’s 21st Century world, it is very crucial that parents ensure that their children are taught the basics of financial literacy which will help them to acquire early in life, essential money management skills.
One of the huge benefits that children will derive from being financially literate early in life is that they will go through the learning process of earning money on their own, learn how to save money as well as learn how to be prudent in spending money. The experience gained in this learning process will help them to become shrewd in managing their personal finances later in adult life.
Financial Literacy Is A Lasting Legacy
Financial literacy for children entails equipping them with the skills to understand the nitty-gritty of financial issues even as children, and also to possess the ability to make prudent financial decisions on their own!
Children that have these skills will be better off than those who do not have them, given the critical impact the acquisition of such skills will have on the lives when they grow up and become adults.
According to Marguerita M. Cheng, the CEO of Blue Ocean Global Wealth, One of the wonderful legacies parents can bequeath to their children, “is to make themunderstand fundamental financial concepts and being able to make prudent financial decisions (which) will have a critical impact on many important aspects of our children’s lives”.
Cheng, stressed the importance of teaching our children and equipping them with skills to handle matters in areas of cash-flow management, saving, debt management, real-estate purchases and refinances, investments, investing planning for retirement and college education, and tax planning.
Indeed, I agree with Cheng that if we are able to train our kids and equip them with requisite financial literacy skills, they will grow up to become adults who are skillful in handling financial matters.
Children with money management skills will appreciate the value of money, the dignity of labor and be adept in dealing with issues such as “compound interest, use of consumer credit, diversification, tax-preferred savings vehicles, and consumer rights”.
How We Can Equip Our Children With
Financial Literacy Skills?
- Identify Family Financial Goals
Parents, especially mothers, will need to identify the family’s financial priorities. However, in designing the family’s financial goals, the cooperation of everyone in the family, especially the children, is needed. The inputs of everyone in the family are essential. The essence is to engender conversations, in the family, on the need for prudent management of the family’s financial resources and in particular encourage saving.
By involving children in the process of setting the family’s financial goals, they will know why it is important to work hard to earn money, as well as appreciate the value of saving and being prudent in saving money.
- We Need To Give Our Children Practical
Training In Money Management
One of the ways of deepening our children’s money management skills is to get them involved practically in shopping and in other similar activities. Again, Marguerita M. Cheng, tells us how important this practical training is.
“By discussing money-making decisions (with the children) as you shop, cook, and pay bills, you provide concrete examples that your children can model. Taking the kids to the grocery store and cooking dinner afterwards, teaches them to apply their math skills in the real world.
“For example, having them bag groceries with you at the checkout shows them how much it really costs to fill up the fridge each week”, Cheng postulated.
The critical point here is that we need to encourage our children to learn how to earn money on their own by engaging them in some little jobs where they can earn some money. And the children will like it because it would afford them the opportunity to have work experiences which will in turn help them value the dignity of labor as well as appreciate the need for shrewdness in spending money.
- Let The Children Have Their Own Saving Accounts
It is important for parents to open savings accounts for their children. This will enable them to have practical experiences of managing their own financial records even from early years in life. They will be able to keep track of their savings and withdrawals. Overtime, they will be able to have their own money which they can spend on clothes and some other things as they grow up into teenagers and adolescents.