We learn best when we are still young. Skills and habits are fostered best when we are still children. Even the best musicians, dancers, artists, and second-language speakers learnt their skills from a young age, their skills just got more polished as they grew older and as they made it a habit to keep learning. The same concept applies for money management. Teaching children about money from a young age is a lot better than leaving it for them to figure out on their own as teens or young adults.
Lesson 1: Many Small Things Put Together Can Grow into Big Things
In the current economy, it’s very easy to assume that KES 5, 10 or 20 has very little value, given how little can be done with these amounts of money these days. But it’s important to show our children that if they take care of these little amounts, larger amounts, such as KES 50, 100, 200 follow.
Let me give an example from personal experience. My parents taught my siblings and me this lesson in very impressive fashion. They simply set up children’s savings accounts for each one of us. These savings accounts came with piggy banks, which they set up on a shelf at home, each with an individual’s name on it. Each one of us was expected to save at least a KES 1 coin per day after school. Meaning that from the lunch money we were given every day, we were supposed to save at least KES 1, which we would put in the jar at the end of the school day. We also saved any cash that our grandparents, aunties and uncles, or older cousins gave us to buy ‘sweets’. At the end of every term, during the school holidays, we would all visit the bank to empty these savings into our savings accounts.
Needless to say, we were all astounded and so excited at how much was in there and the message hit home: every shilling matters, and it all adds up. Personally, by the end of high school, I had saved approximately KES 18,000. To this day, I still take care of all my money, I stick to monthly budgets and save as much as I can. Also, my older siblings, who are now parents themselves, have passed this tradition to their little children.
Lesson 2: The Best Way to Get Money is to Earn it
Today’s generation of kids is so used to getting everything they ask for whenever they ask for it; and this should not be the case. The best way to teach your children that money doesn’t come for free is to sometimes tell them NO and to make them perform some sort of chores around the house in return for pocket money. When they’re very young, chores can be as simple as keeping their rooms tidy, wiping the dining table or doing the dishes every night. When they’re more grown, say in upper primary school, they can be washing the car, performing a day of gardening, mopping the house or sorting out the kitchen cabinets. The trick is to introduce it at a time when they really want you to buy them something new, say a new game or that pair of shoes that’s fashionable at the time. This is a great way of ensuring your children learn that you get paid for working, not just sitting around.
Lesson 3: Keep Track of Where Money Goes
Encourage your children to keep a record of their expenses from a very early age. This can be through getting them small notebooks where they can jot down how much they spend every day and on what items. And when their money runs out before they get to fully accomplish the purchase requirements, do not just give them a top up, allow them to learn the importance of proper planning and budgeting.
This process allows you to also sit down with them periodically and identify spending patterns and traps. This way, you’ll teach them that sometimes it is not the big purchases that use up all our money, but many small purchases.
In conclusion, teaching children the basics of money management will set them up to be adults who take care of their money. Responsible spending and saving habits should be fostered early so that when they’re adults, they can them live happy, prosperous and financially secure lives – and, if we’re lucky, we might learn something along the way too!
Talk to us about opening a savings account for your little children so you can start fostering money management habits early enough.