Educating and inspiring children to save money allows them to utilize their money sensibly in their adult life.
Spending and saving resolutions made in their childhood can have an impact on their financial expectations and in addition influence investment choices they may ever make.
As shortly as children can count up, they should be introduced to money with the goal of laying a concrete foundation for financial responsibility, which assists them to make excellent spending resolutions in future.
Personal finance specialists suppose that people who don’t learn on handling cash at a young age regularly mishandle their finances in their later life.
Consequently, parents are counseled to educate children the essentials of saving and spending in their early years.
Parents take:
“Having two young boys, the oldest five and the youngest one, I think about this topic on a daily basis. My wife and I have started teaching our oldest son some lessons about saving money and the importance of being financially independent. While each of these lessons are minor and may seem insignificant, I believe that overall they will help to shape his values as he grows older. I am a firm believer that our schools don’t do enough to teach our children about money. We may force mathematics and science on them, but we miss out on providing them real-life lessons in personal money management. It is not until they get into college that they start to realize the real world can be very tough.
I believe that parents must provide their children with the knowledge of saving money, living on a budget, and the value of a shilling. It is these simple lessons in life that will prepare them for the future and allow them to become independent” Anthony Wachira a father of two.
“Want and Need List- I actually got this idea from a co-worker of mine. Every year for Christmas, she tells her children to create 2 lists for their wishes. The first list is their WANT list. This list should only include things that they want and don’t need. The second list is their NEED list. This list should include items that the children really do need. For example, our son may need a new coat because his coat from last year is too small. He needs this coat to stay warm when playing outside. I think this is a very powerful teaching tool to use with your children. Once they have the two lists created, they should prioritize their wants. That way you can teach them not to expect to get everything they want in life and to make choices.
I would even go as far as saying that you can help your teen plan their own budget for something that they want. For example if they are looking at getting a new iPod or phone. They need to know the cost, what they have saved, and what money they have coming in, and they need to keep track of the spending habits they have. That KSH100.00 here and there adds up pretty quickly.” Christine Muli a mother of three.
“Our oldest son is at the age where we are going to start to give him an allowance for helping out around the house. We will be setting up a family bank (as I like to call it) where we will pay him his allowance every week. He then will have the opportunity to deposit that money back to my wife and I that will earn him some interest along the way. For example, if we gave him KSH80.00 per week, he could have the option of keeping that money and buying a new item or some candy with it every week. We would also give him the option to give us back that money and each week to earn 25 cents in interest. After 4 weeks, he would have KSH160.00 instead of KSH80.00 which could buy him 2 new items instead of 1! I know that is a nice interest rate, but we want to keep it simple.” James Mwanyota a father of two.
Essentials of saving and spending
-To offer youngsters a free hand in managing their finances, they should be permitted to make withdraws from their savings fund and make their personal spending resolutions – whether good or bad – to allow them learn how to make sovereign resolutions.
-A normal family discussion would assist younger children to frankly talk regarding cash. It is at such discussions that they can collect information on how to build savings and how to spend. Through such meetings, they can be able to realize the essentials of financial choice making and they should be educated that they can’t obtain everything they want.
-At a gentle age, youngsters should be taught the dangers of borrowing and paying interest. A parent or custodian should indict interest on small loans made to them; this assists them recognize how costly it is to utilize somebody else’s money. This worth can be grained in them through goal-setting sessions for what they require, for example toys. These sessions assist them to prioritize how to spend.
-A lot of youngsters suppose automated teller machines (ATMs) are magic machines that eject money at the touch of a button. But, children should be made to realize that to obtain money out of an ATM, deposits should be made – and that this is just achievable by earning through working. Parents should make the notion that employment allows a person to pay bills, rent, food, clothing and entertainment.
-Whilst utilizing a credit card, parents should take the chance to educate children on how the card works. They should be shown how to confirm charges, how to analyze interest, and how to safeguard against credit fraud. They should be informed of the high interest charged for cash advance using the card and further penalizing fines that come with plastic money.
-Children should in addition be encouraged to keep reports of cash saved or invested. This is an essential exercise that will introduce them to the skill of book-keeping.
-Parents should express the notion of earning interest income on savings. This can be completed by replenishing on what they save as it assists children see how quick money accrues through the power of compound interest. This effortless exercise assists them recognize how savings accounts earn interest.
-Opening bank accounts allows children to discover how banks functions.
Experts Advice:
George Murori a financial advisor: He agrees with the statement that the reason so many kids are financially illiterate is due to the fact that many adults do not know how to effective manage money and that sometimes it is better to not pass on bad habits and let children figure things out on their own. He admitted that when he was a teenager he had no idea what it costs to live. It just wasn't something that was talked about in their house. This is true for many adults, most can look back and unless you came from a poor family, the value of a shilling just wasn't an issue. “Can you look back and remember your parents discussing with you the cost of electricity, the grocery bill? Personally I can tell you that while we weren't really taught about the cost of things, we didn't have money… and I learned how to manage money based on the experiences of that poor childhood.
I believe it is a parent’s responsibility to guide their children through there early years. While schools are very important and necessary, I think a child learns life’s true lessons from home. Being book smart and educated is important, but being able to apply those smarts in the real-world is the biggest lesson of all.“
Cyril Wanda a financial advisor: "Finding out the ins and outs of individual financial budgeting and management is something that is ideally taught to minors at an early age so that they can acquire good money management skills right from the beginning. Not putting too much importance to proper money management most often results to financial disaster.
It is always advisable when children and teens are able to hear about budgeting and money management because this education and money management skills will be with them for the remainder of their lives. When individuals don’t have the chance to learn how to manage credit and their personal finances, they will most likely squander money and burn through it as soon as they earn it, and they may get themselves into debt way over their heads. There are many individuals who enter adulthood without having learned about budgeting and personal financial management. They find themselves exhilarated at the money they gain at their first full-time job, and often such excitement leads to overspending and a lack of preparing for the future, of not being prepared for emergencies and of overusing credit cards and other credit vehicles that can soon lead to critical debt.
If a person sinks deeply into debt when they are still in their twenties, because of immaturity and poor money management abilities, then they can end up spending the next twenty years, or more, trying to dig out of the hole of consumer debt that they put themselves into. This may very well result to bankruptcy which will result in a bad record on a person’s credit standing.
Parents must start teaching the value of money to their children at an early age. Children must be made aware of money value and the consequences of misusing it. Aside from the fact children could considerably dent the budget if they just spend and spend without reason they may have a hard time controlling their finances when they grow up.
Eventually it is going to be a trend that could become unstoppable for generations. If parents want their children to prepare for the future, they should start teaching the children the value of money as early as possible.”
