Smart tips for teaching your children personal finance
'Children are tomorrow's leaders,' is a well-known adage emphasizing the importance of parents providing quality education for their children. Despite receiving a good education, many young adults and even the elderly struggle to manage their personal finances.Personal finance is an essential life skill that every child should learn, but it is not always taught in schools. As a result, it is critical that you, as parents, take charge and teach your children about personal finance.
You are preparing your children for a successful future by providing them with the financial knowledge and skills they will need to make informed decisions throughout their lives by teaching them about personal finance.
Finance has many facets, and this difficult nut of financial management has become a major headache for many, leading to financial complications that have left them penniless and depressed.
Some people have turned to get-rich-quick schemes and other fraudulent schemes that have done more harm than good.
Many discussions about the problem of poor financial decisions stem from a lack of early access to money education.
According to the 2021 TIAA Institute-GFLEC Personal Finance Index, black adults lag behind whites in financial literacy.
According to this report, Africans are largely disadvantaged in the area of financial education, which begins in childhood, despite the fact that financial literacy is an important life skill for effective participation in modern society.
Children are growing up in an increasingly complex world in which they will eventually be responsible for their own financial future. Experts recommend that parents begin the process of financial education with their children so that when they are adults, they can live independently while making well-informed and wise financial decisions for daily living.
In fact, according to a national survey, young adults make up the majority of those with the lowest levels of financial literacy. According to a report by The Organization for Economic Cooperation and Development-Financial Education in Schools, this is reflected by their general inability to choose the right financial products and, in many cases, a lack of interest in undertaking sound financial planning.
According to the S&P Global Financial Literacy Survey, African countries have the lowest financial literacy rates in the world. According to the survey, Botswana has the highest level of financial literacy (51%), while Somalia has the lowest level (15%).
According to the S&P survey, Nigeria has an adult financial literacy level of 26%, which reflects the current realities of hardship and poverty. This is because most people were not taught financial education as children. According to the survey, "the young are a vulnerable group and an important target for financial education programs."
Personal finance experts have repeatedly emphasized the importance of bringing the gospel of financial literacy to schools in order to ensure that the next generation is well equipped to participate effectively in the ever-changing complexities of the economy and its financial markets.
Oluwatosin Olaseinde, the Founder of Money Afric, discusses the negative impact that a lack of access to personal finance education has on Nigerians in an interview.
"Every time we teach adults about money, they end up spending their 20s and sometimes early 30s trying to figure it out," she says. "However, if we get to the children early to play a long-term game, and we catch them in schools, catch them in primary and secondary schools, look for ways to inculcate it into the system, we can play a long-term game." We're assisting adults who will be able to better manage their money."
Jennifer Awirigwe, an investment banker and the founder of FinTribe, advises parents on the importance of instilling personal finance education in their children.
"Many of us were not taught money as children," she says. Our parents and schools did not. That is why there are so many adults today who can make money but not manage it."
Awirigwe emphasizes the following suggestions.
She claims that discussing topics such as earning, saving, and other topics with children will help to create a more relaxed environment.
"Money should be a free topic of conversation," she believes.
"Assign age-appropriate tasks they don't usually handle to them, then pay them for them," she advises parents. This will teach them about work ethics and earning money."
Teach them the value of saving.
Parents, according to the Fintribe founder, "can get a piggybox." A portion of their earnings from paid tasks are directed there. Gifts are delivered there. Increase the stakes by promising to match their savings. This will motivate them to save more money.
"Take them with you to banks and investment firms and explain what happens there." Be a good example by discussing some of your financial decisions with them."
Cowrywise explains in a report that being open with your finances as a parent to teach your children about money will go a long way.
"As strange as it may sound, the first step is being open with your children about your finances," it says.
"As a result, you would need to have attained a level of financial responsibility before attempting this, as you would not want to set a bad example!" Show them how much you spend, how much money comes in from your salary, how much you save.
"Not only will this help teach your children about money, but it will also improve their money and arithmetic knowledge."
Teach your students the value of money.
According to Olalekan Fadiya, an economist, parents must educate their children on the importance of earning a living.
"For kids, I believe the first thing their parents should teach them is the value attached to earning the least amount of currency," Fadiya says.
"Use case studies from the labor market to show them that earning money legitimately requires a lot of effort and sacrifice." From there, every currency will be valuable to them, and they will not be wasteful now or in the future."
To support this, Chuks Igumbor, Managing Director/ Chief Executive Officer of Prudential Zenith, stated at the launch of the 'Cha-Ching Money Show educating children on financial literacy in Lagos, that it is critical that children learn the value of money, how to set money aside for savings, and how to make wise financial decisions.
"Children can use this information to their advantage as they grow older and begin to manage their finances," Igumbor says.
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