‘Children are tomorrow’s leaders’ is a well-known adage that underscores the need for parents to provide their children with quality education. Despite quality education, many young adults and even the elderly struggle when it comes to managing their personal finances.
Personal finance is an important life skill that every child should learn, but unfortunately, it is not always taught in schools. That is why it is important that you, as parents, should take charge and teach your children about personal finance.
By teaching your children about personal finance, you are preparing them for a successful future by giving them the financial knowledge and skills they need to make informed decisions throughout their lives.
There are many sides to finance and this hard nut of financial management has become a major headache leading many into financial complications that have left them penniless and depressed.
Some have resorted to get rich quick schemes and other fraudulent ventures that have caused more harm than good.
Many conversations on the problem of poor financial decisions take root in not having early access to money education.
A report by the 2021 TIAA Institute-GFLEC Personal Finance Index reveals that black adults are behind whites when it comes to financial literacy.
Following this report, it means that Africans are largely disadvantaged in the area of financial education and this starts from child hood, particularly as financial literacy is an important life skill for efficient participation in modern society.
Children are growing up in an increasingly complex world where they will eventually need to take charge of their own financial future. Experts advise that parent should begin the process of financial education so that as these children become adults, they can live independently while making well informed and wise financial choices for daily living,
In fact, a national survey shows that young adults form the bulk of those with the lowest levels of financial literacy. This is reflected by their general inability to choose the right financial products and often, lack of interest in undertaking sound financial planning, a report by The Organization for Economic Cooperation and Development-Financial Education in Schools disclosed.
According to S&P’s Global Financial Literacy Survey, African countries score the lowest in terms of financial literacy in the world. The most financial literate country is Botswana at 51 per cent and the least is Somalia at 15 per cent according to the survey.
The S&P survey shows that Nigeria has an adult financial literacy level of 26 per cent which mirrors the current realities of hardship and poverty. This is because most individuals were not trained on financial education as children. The survey highlights that “the young are a vulnerable group and an important target for financial education programmes.”
Experts in the personal finance space have constantly emphasised the importance of taking the gospel of financial literacy to schools to ensure that the next generation is well equipped to participate effectively in the ever changing complexities of the economy and its financial markets.
In an interview with The PUNCH, Founder of Money Afric, Oluwatosin Olaseinde, addresses the detrimental effect that lack of access to personal finance education poses to Nigerians.
She says, “Every time we teach adults about money, they end up spending their 20s and sometimes early 30s trying to figure it out, but if we get to the children early to play a long-term game, and we catch them in schools, catch them in primary and secondary schools, look for how to inculcate it into the system. We’re helping adults who will be able to manage their money better.”
An investment banker and Founder, FinTribe, Jennifer Awirigwe, advises parents on the importance of instilling personal finance education into their wards.
She explains that, “Many of us were not taught money while growing up. Our parents didn’t, schools didn’t. That is why we have so many adults today that are good at making money but cannot manage it.”
Awirigwe highlights the following recommendations.
Discuss basic money concepts
She narrates that discussing concepts like earning, savings and others with children, should help open up a more relaxed atmosphere.
“Money should be a free topic of discussion,” she says.
She urges parents to “Assign age-appropriate tasks they don’t usually handle to them, then pay them for them. This will teach them work ethics and earning.”
Teach them savings culture
The Fintribe founder further adds that parents “Can get a piggybox. Part of the income they get from their paid tasks goes there. Gifts go there. Take it up a notch, and promise to match their savings. This will encourage them to save more.
“Take them on your visits to banks, investment houses and explain what happens there. Discuss some of your financial decisions with them and be a good example.”
In a report, Cowrywise explains that being open with your finances as a parent to teach your kids about money will go a long way.
It states, “As weird as this might sound, the first step is being open with your children about your finances.
“Hence, you would need to have achieved a level of financial responsibility before trying this as you would not want to speak about a bad example! Show them how much you spend, how money comes in from your salary to service spending, and how much you save.
“Not only would this help teach your children about money, but it will improve their money knowledge and also their arithmetic knowledge.”
Teach the value of money
Speaking to The PUNCH, an Economist, Olalekan Fadiya, explains that parents must enlighten their children on the value that comes with earning an income.
Fadiya says, “For kids, I believe the first thing they must be taught by their parents is the value attached to earning the least amount of currency.
“Make them see that earning money legitimately requires a whole of effort and sacrifices with case studies of the labour market. From there, every currency will be valuable to them and this won’t make them spendthrifts now and in the future.”
To further buttress, Managing Director/ Chief Executive Officer of Prudential Zenith, Chuks Igumbor, while speaking at the launch of the ‘Cha-Ching Money Show educating children on financial literacy in Lagos, adds that it is important that kids learn the value of money, how to set aside money for savings, and how to make wise financial decisions.
“Children can use this information as an advantage as they get older and start taking care of their finances,” Igumbor says.
