Raising financially responsible children is a serious commitment in today’s complex economy. But teaching your kids about money and savings from a young age can help them develop good financial habits that will serve them throughout their lives. This is because what you expose them to is what they will grow up to practice and also teach future generations.

Don’t let your kids become another statistic! Equipping them with smart money habits at home sets them up for financial success as adults.

How do you do this?

Consider these nine tips for raising financially smart kids.

 

Tip 1: Start with the basics

Begin by familiarising your kids with the concept of money. Use different notes to help them understand different denominations. Play simple money-related games such as Monopoly, Money Bingo, etc, to make learning fun.

Introduce saving boxes for them to deposit those cash they get from aunties, uncles, grannies and well wishers and as they get older, you can introduce more abstract concepts like digital money and bank accounts.

Tip 2: Choose Needs in place of Wants

One of the most fundamental lessons is distinguishing between needs and wants. Explain that needs are essentials like food, clothing, and shelter, while wants are extras like toys and sweets and even biscuits. Use real-life examples to illustrate this, helping them understand that prioritising needs over wants is crucial for financial stability in life.

Tip 3 : Teach through allowances

If your kids are grown enough to manage money, you can teach them financial responsibility through allowances. An allowance provides children with a hands-on way to learn money management. Decide on a reasonable amount based on their age and your family’s budget. Be consistent with the allowance at regular intervals, such as weekly or monthly and access their management capacity.

Also, you can encourage your kids to divide their allowance into categories: saving, spending, and sharing. Saving teaches them the value of delayed gratification, spending allows them to make choices and learn from mistakes, and sharing instils a sense of generosity and social responsibility. Let them decide which they need to prioritise on their own. By doing this, you can checkmate who is prudent and who isn’t and find ways to correct it.

 

Tip 4 : Set Savings goals

Help your kids set both short-term and long-term savings goals. Short-term goals could be for smaller items like a toy, while long-term goals might be for bigger purchases like a bike. This practice teaches them to plan and be patient.

You may also use visual tools like savings charts or apps designed for kids to track their progress. This not only makes saving fun for them but also gives them a sense of accomplishment as they get closer to their goals.

Tip 5 : Introduce simple budgeting

Introduce budgeting by helping your children track their income and expenses. Start with a simple notebook or a digital tool tailored for kids. Teach them to list their allowance, gifts, and any other income, and then record their spending to give account at the end of the month or when the allowance ends.

Tip 6 : Living within means

Discuss the importance of living within one’s means. Explain that they shouldn’t spend more than they have and highlight the consequences of overspending. Use examples from everyday life, such as planning a budget for a family outing, to illustrate these principles. Children also learn by example, so if you’re the spendthrift type, please, cut it down for the kids’ sake.

Tips 7 : Encourage smart spending

Teach your children to be discerning consumers. Teach it to them the Nigerian way– compare prices, insist on discounts, and assess the quality and value of what they buy. Let them know that a physical survey before purchasing an item is always better than a remote purchase.

Thoughtful decision making is also key. Therefore, encourage critical thinking by asking questions like, “Do you really need this?” or “Is there a cheaper alternative?” This helps cultivate a mindset of thoughtful spending rather than impulsive buying.

Tip 8 : Leading by example

Children learn by observing their parents. Demonstrate good financial habits in your own life. Show the importance of saving, budgeting, and making informed financial decisions. Discuss your own financial goals and the steps you’re taking to achieve them. Your behaviour sets a powerful example for your children to follow. Remember you’re their first teacher in all things.

Man up to financial mistakes and what you’ve learned from them. This teaches children that making mistakes is a part of learning and growing. It also shows them the importance of resilience and making better choices in the future.

Tip 9 : Leverage Technology

Lastly, embrace technology to teach financial literacy. Let them learn concepts such as online banking, online transactions and teach them to manage their bank accounts on their own. introduce online banking tools that can make learning about finances fun and engaging.

Give them time to really digest and put to practise all you have taught them. Don’t forget to celebrate their milestones as they learn and grow.