• Tuesday, February 27, 2024
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BusinessDay

Teaching a child the way to financial management

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Research has shown that kids who have the savvy of saving money end up growing becoming better mangers of finance and are proficient in astute financial decisions.

 In those days, when l was a kid, my parents bought me  a local save box called “kolo” in Yoruba language; other tribes have name for it. This is a safe place to keep money l had saved out of my allowance or gift from visitors.

One of the best ways according to researchers in teaching your child the principle of investment is to let them have their own money. The ultimate goal of an allowance is to have your child deftly handling all expenditures before he or she leaves for college.

Most experts agree that first grade is a good time to start and they are unanimous in telling parents to adopt a hands-off attitude. We all learn from mistakes and it’s nice if children can do that at a young age when the mistakes are small.

Sagacious parents monitor kids to know whether they are setting aside part of their pocket money as reserves. In this modern age of technologies and string of banks springing up, parents acquaint their children on how financial institution works by making them use one.

Open a savings account for your child at your bank. Have your child start saving a portion of his/her allowance and as an added incentive, tell him/her that you will match his/her savings.

Consider giving them an allowance large enough so that they can purchase some of their own needs. Then continue to give them honest advice, and help them ask the right questions to make wise decisions based on their values.

Moreover, in order not to have our children unnecessarily falter in finance later in life, but bring them up to know the implication of reckless spending, and, moreover, they shouldn’t be given loans.

This may seem a draconic idea but it allows them save for what they desire to purchase. Loaning your children money for items they want teaches them they aren’t responsible and they don’t have to prioritise.

In order not leave them to quiver in the event of unforeseen circumstance such as job loss or economic recessions, the principles of savings and consumption should be paramount.

If he or she has N100, how much of it will he or she save? Some parents, depending on the spending pattern of the individual child still advocate 20 percent savings and 80 consumption. However, these scenarios can vary from household to household.

If parents wish to instil proper financial discipline in children, they have to be role models themselves. They should be seen to be financially meticulous, scrupulous, and thorough. You can’t tell your children they should save money, then constantly spend, charge, and go into debt yourself.

Discuss your financial decisions with your children present so they can learn from them. Involving your children in family finances can be one of the best ways to teach them about managing money.

By:  Bala Augie