A boy counts money before depositing it in a bank. Teach children about the value of money. PHOTO/FILE
One of the most important lessons you can teach your children is understanding how money works. This knowledge can assist them in developing several positive qualities including self-discipline, responsibility, organisation, and even philanthropy. It’s never too early to start, or too late to help children understand financial responsibility. The question is: Where do you start?
First get your house in order. When it comes to financial education, always remember that as a parent, children are looking up to you to learn how to handle their finances later in life. It is, therefore, very important to be a good role model. Budget your income sensibly and establish a savings behaviour. Depending on how old they are, involve your children in the budgeting process by asking them to budget for a weekend outing, for example. You could give them an allowance and let them budget for their day’s activities or snacks.
Once you are certain that you are setting a good example by handling your finances responsibly, you could explore broader topics such as the value of money, savings and investments with your children. After all, they say that you cannot pour from an empty cup.
Begin by teaching the children about the value of money. One of the hardest concepts to convey to a child when you begin teaching them about finances is the value of money. Most likely, they have learnt to count at school and yours is to make them understand the value of each denomination. To do this, encourage them to count coins starting with the lowest. Explain to the child what it means to have Shs50,000 by building a pile of one hundred 500-shilling coins.
You could make a game out of it by gathering lots of coins with different denominations and deciding on the amount you are going to make using them. For example, if they want to make Shs100,000, pile a hundred one thousand-shilling notes or two fifty thousand-shilling notes. This way, the child will grasp the value of each coin and note such that the next time you go shopping together, they understand how many actual shillings their desired toy costs.
After they learn the value of money, let them understand that it is earned and not simply given. This is a good mindset for children to get into early in life. Whilst giving your child pocket money is common in Uganda, consider giving your child a commission for the work they do instead. For instance, instead of simply giving them money for no real reason, you could pay them for completing their house chores or help them craft items and sell them to friends or even online.
Now that they are earning, the next lesson involves digging behind the couch and saving some pennies. Give your child a container where they can start building their savings. Preferably, use a clear plastic or glass a clear container that allows them to see their monies increasing week by week. Remember, the best way to teach children about money by giving them visual examples. You could even have separate containers for different denominations if you like. You could then ask them which jar has the most value. Although the 50-shilling jar may seem fuller, it would be less valuable compared to the 500-shilling jar.
Finally, after they have put away some cash, they need to learn how to spend it prudently. There are several dimensions to this. As earlier mentioned, you ought to teach children how to budget while prioritising their needs. Let them differentiate their needs and wants. Explain that all their earnings are supposed to be enough for their needs but more importantly, they should not eat to finish. Instead, they should save a portion of their earnings for future use or investment.
You could open a money market fund account or bank savings account where they could be depositing their savings. Such investment instruments will help them understand the concept of interest as they receive periodic account statements.
Encourage them to save more for higher interest amounts.
Brian Bongomin is the manager, business development and operations at Enwealth Financial Services Limited (U).
