“How do I teach my children about money?”
This question is similar to many other questions parents ask when it comes to teaching children about money, as they have little understanding of teaching financial literacy. To answer this and others, we have outlined three simple ways you can help children learn about money and wealth management — a great gift every child should receive from you.
1. More Money Talk
As weird as this might sound, the first step is being open with your children about your finances. Hence, you’d need to have achieved a level of financial responsibility before trying this as you would not want to speak about a bad example! Show them how much you spend, how money comes in from your salary to service spending, and how much you save. Not only would this help teach your children about money, but it will improve their money knowledge and also their arithmetic knowledge.
2. Their First Savings
When children receive pocket money or cash gifts, they can be pushed to request or make purchases of toys, games and clothes. This presents a good opportunity to teach your children about saving and investments; encourage them to save 50% of any received cash first before spending. Encouraging them to save just 10% or 20% can establish the idea that it is okay to spend up to 90% of their income on consumption. To achieve this, you would have to bury the Nigerian attitude of taking cash gifts from them and boasting to them that you pay for their meals and all so you have the right to control their cash (Lol!).
3. Introduce Wealth Growth
As they mature you can introduce them to investment simulators for children that would train them. Also, based on the expectation that you won’t tamper with their savings, you can help them invest their savings in secure instruments that won’t lead to losses that can discourage them. To make this easier you can set up a plan for them with your Cowrywise account, one that you would continually show them its progress. That way, they can be introduced to the beauty of building up and the power of compounding.
Bringing this to a close, as you celebrate with your children or younger ones — this is for the firstborns especially; we feel your pain — make a simple decision to invest in their future. Do not just invest for them with your own funds, commit to teaching them how to with these three simple steps. That rich future is not necessarily dependent on how much they make but on how well they can manage the wealth.