When it comes to money issues, many young children believe that money comes from mum and dad – simple as that. If they need anything, all they have to do is ask and automatically – almost magically – their parents will provide. Every so often, they see mum or dad go to a machine in the wall that automatically spews out money at the press of a few buttons.
Needless to say, their concept of money and its availability is totally warped. Therefore, just as almost all other things, it is up to a parent to give their child a clear understanding of money and its acquisition. This goes beyond telling them ‘money does not grow on trees’ and actually offering a constructive explanation.
It involves explaining to your child that money is earned by working and that you can only spend what you earn. Contrary to popular belief, teaching your child about the basics of money should not be done during adolescence rather when the child first begins to notice money. Below are tips on how to do this:-
Teach them the value of money: - make this in relation to something they will understand . For instance if a young child is asking for a mountain bike which costs a tidy sum compare the amount required to how many chocolates/sweets the same amount can purchase. Or you can arrive at an agreement whereby a certain amount of money is put aside each month for this venture, when the child sees just how long it will take to get this kind of money, they begin to appreciate the value of the shilling.
Give them an allowance: - Various money lessons are learnt when a child is given an age appropriate allowance. The first is getting paid on a schedule which necessitates waiting and shows that money is not always available on demand. This helps the child understand that when they ask for something and mum or dad asks them to wait until a later date it is because they do not have money at the time and not because they are just being mean.
The second valuable lesson that an allowance teaches the child is the concept that money has to be earned through working for it. In this case, pay the child for chores done outside his/her normal duties. Don’t pay the child for making his bed but pay him for helping wash the family car. This helps the child distinguish between what is their duty/responsibility and what is an errand.
The final lesson learnt by giving an allowance is that one can only spend what one earns. If a child wants to buy something valued at Sh100 and they only get Sh20 as an allowance, this child learns that he cannot immediately purchase whatever he wants with the money he has. He learns that he has to accumulate his Sh20 undertake other errands around the home to increase his earnings.
Make saving interesting: - Buy your child a piggy bank and explain to them that you too use a bank to save your money. As your child saves their money, you can reward them with an additional amount just like the bank pays interest on your own savings. Encourage them to outline a specific goal they are saving towards so that they are not just putting money aside for the sake of it.
Teach practically: - Let your older children accompany you to the bank. Teach them the various banking terminologies; show them how to fill in the various banking slips like cash or cheque deposits. Allow them once in a while to manoeuvre their way in the banking hall as you wait for them; this will give them confidence and give them valuable lifetime lessons.