Here are some proven steps to raising children who will grow up to become financially responsible adults:
1. Be the example they need to learn from: It’s not enough to give your children lessons in keeping naira notes in a box or wallet, or entering items into the credit and debit sides of a financial record. Financial prudence is best inculcated by observing it in action, over an extended period. You are the best possible example your children will ever have to learn this from, as you are (very likely) the first and closest exposure they will get to the art of saving and spending. They should find you a worthy example to emulate, one whose words are matched by actions.
2. Teach them to take a long-term view of things: It’s alright for children to enjoy the outings and the exquisite gifts, but it’s also important to have a long-term view of life which takes into account how the present decisions on spending affect our ability to meet our needs in the future. Delaying gratification is what this is all about. Children need to be shown that we all have to give up some things in order to get some other things (if they want to get good grades, they have to give up playing as much as they used to- for a while).
3. Get them to imbibe a culture of saving: We do not use up all our earnings for present consumption. We save a fraction for ‘the rainy day’. Children have to be taught about this- they won’t learn this out of the blues. When they receive money (whether as a gift or as payment for a chore), they could keep a small part of it in a safe. As they do this over time, they will watch their savings grow, take pride in it, and be spurred on to become even more conscious of their saving habits.
If they learn to keep records of the money that comes into and goes out of their safe (what they receive and spend), they will be better able to track their spending pattern and make informed choices about prioritizing needs according to what they earn.
4. Open a Savings Account in their name, and involve them in maintaining it: This is a practical way of introducing children to the bank and its role in saving and financial matters in general. Again, there is a sense of pride involved here- they get to own something. The account can be run on their behalf, but it is important that they get to know how it is operated. What this does is to make them get used to the banking system early enough, and acquaint them with the services offered by financial institutions which they could take advantage of when they come of age and begin to earn their own income.
5. Explain financial concepts to them: Discussions between you and your spouse could throw up a number of terms related to finance which your children might not understand. Take those moments as opportunities to give them some new insight into finance by explaining things to them.
6. Let them make mistakes: There are consequences for every decision we make. Bad decisions will be followed by negative consequences, and if we are wise, we learn to avoid such outcomes by not taking actions that lead to them. We might advise our children to do the ’right thing’ because we want the best for them. But we will have to let them take responsibility for their actions and learn from their mistakes, especially as they grow older. The pain of not having what they really need after they spend their allowance or personal savings on frivolous things might be a more effective teacher of financial prudence than the most detailed lecture on financial management.