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Thabo Qoako | Teaching your children financial savviness

Thabo Qoako | Teaching your children financial savviness
10-05-24 / Thabo Qoako

Thabo Qoako | Teaching your children financial savviness

An oftentimes overlooked subject when it comes to effective parenting, empowering children with financial literacy from a young age is one of the greatest gifts parents can give to their children. As the world becomes increasingly complex, teaching your little ones about sound financial management isn't just about educating them about what rands and cents are or, how money works; it's about equipping them with the skills and knowledge to navigate a financially savvy future.

From the basics of budgeting to the intricacies of investing, instilling sound financial habits early on sets the stage for a lifetime of positive financial well-being. Here are a few thought-starters on how to get your children into the habit of practicing good money management.

Start building a foundation from as early on as is possible

No two children are the same when it comes to learning paces. Start your children off on a strong footing by beginning with the basic concepts like identifying coins and understanding their value from about age three – depending on what information they are able to grasp. You can help them visualise what R20 can buy them at the shops. Well known celebrities have been caught on the back foot when asked what the cost of a loaf of bread is. Don't put your children in the same position – teach them the value of money by sharing with them the costs of everyday basics.

Next, move onto money saving by giving them piggybanks or jars labelled for special goals. E.g. want to pay for your own ice-cream next time we go out? Here's a jar to save those coins into to do just that. You can also use simple stories or games to teach them the importance of patience and delayed gratification. As the years progress, roundabout from age six, expand their understanding by introducing concepts like earning, spending and giving back. Start with pocket money in exchange for simple chores like room cleaning or laundry folding to teach them the value of work and the pride of earning. Start encouraging them to set short term goals like purchasing a toy or a game they've had their eye on.

Provide them with hands-on experience

From between the ages of 10 – 13, start involving them in family financial discussions, such as budgeting for groceries or having a say in an outing or holiday destination. It will help them understand for example that they cannot have Disneyland on a Durban budget. Introduce to them the concept of budgeting by helping them allocate their monthly allowance or earnings into different category buckets i.e. saving; spending and giving. For example, persuade them to better their relationship with money by sharing the 10-10-80 principle with your children: save 10%, give back 10% to a charity of your choosing and spend 80% on anything you would like to treat yourself to for that month. This is also a good time to share the brutal reality of tax.  They should be able to distinguish between needs and wants.

Using technology wisely

Teach your children about the potential risks of scams and fraud, both online and offline. Train them to recognise warning signs such as promises of quick riches or requests for personal information via clickbait links. From an offline point of view, openly communicate to them the importance of personal space at banks and ATMs and how they are never to insert a card PIN if they are being pressured to do so by someone standing uncomfortably close to them in a queue. Instil in them a healthy scepticism and encourage them to verify online information.

Preparing for adulthood

A good age to start teaching them about investing basics such as stocks, bonds and mutual funds is age 16. Discuss with your young adults the importance of building an emergency fund and saving for retirement from an early age – they can start saving at any age. Cultivating a habit of saving is a worthwhile trait for anyone to master. Encourage them to seek out resources like books, online courses or even reaching out to a financial advisor to continue their financial education. A great one to look into is 'The My 3 Piggies' book series by Gugu Sidaki.

Celebrate milestones and progress

Be on the lookout to recognise and celebrate their financial achievements, whether it's reaching a savings goal or making a wise spending decision. Use positive reinforcement to promote good financial habits and motivate them to continue learning and growing in their financial literacy journey.

In a world where financial literacy is of the utmost importance, empowering our children with the tools to navigate their financial future is not just an investment in their tomorrow but, in the legacy we leave behind.

*Thabo Qoako, Consumer Financial Education Specialist at Momentum Metropolitan.

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