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September 26, 2018

Teaching children financial prudence

We made a pact with TJ sometimes back that I would give him some monetary award if he attained certain goals in his school work. Prior to the agreement he had been quite unmotivated and the teacher had encouraged me to look for ways to motivate him. Knowing my son, money was the greatest motivator and I was proved right when in less than a month his work improved tremendously. Problem is before I knew it I was in debt. As we speak, I am still paying off the debt I owe him. It didn’t take me very long to figure out that perhaps I had used the wrong bait.

Teaching children financial prudence is one of the most difficult lessons that a parent may need to teach their child. I believe some of the reasons this is so is because most parents are themselves either not financially savvy, or were not trained as children to handle money and thus lack the know-how to instill good financial habits to their offspring.

I remember earlier in our parenting journey we started giving pocket money to the children but it did not go as well as we planned as they spent most of it on candy. We decided to change from just dishing out money and paid for chores done, before long they wanted payment for every little thing done and we realised once again it was not working. Unfortunately not knowing any better, we just forgot the whole thing. Looking back I believe one of the reasons why we were unsuccessful is that we started the process too early. The boys were still very young and it was difficult for them to grasp the value of money. I also think we did not have a good strategy. We knew what we wanted to teach but we did not have a strategic plan that would get us there.

According to Syble Solomon, creator of Money Habitudes, one of the ways that a parent can help their child become more financially savvy is by teaching them to set goals and to save for them. She encourages that you put aside a jar and have your child collect their pocket money or money paid for chores done there. Once the money has been saved up then go with the child to purchase the desired item. The trick is to start with cheaper goals and move to the more expensive items depending on the age of the child. I have seen this work with my own boys and can testify it works. One of the key things I noticed is that there seemed to be a major appreciation of the item saved for because it cost them that much more. There were also bonus life lessons like sacrificing the immediate gratification for the greater good. Lessons that I hope will carry them through life.

I don’t claim to be a financial expert — in fact some of my friends reading this would laugh at the thought. Yet being a parent and wanting my children to learn from my own shortcomings has forced me to up my game in many areas including the area of finance. As I stretch and grow, I pray that I will give them a little more wisdom in this area than I received from my own parents (who incidentally had a banking background, go figure). In this way they will hopefully be wiser in recognising and grasping the opportunities availed to them.

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