What was the first financial lesson you learned as a child?
Do you believe your parents or guardians did their best to teach you about money based on how you currently handle money?
We speak with Edith Siddondo, a certified money coach, author, and the founder and CEO of Profit Acumen, a money coaching organization, about the most important financial things you can teach your child.
Does my upbringing and my parents’ influence affect how I handle money?
Your financial story is not always comprised of the financial lessons your parents taught you directly as a child.
Instead, it is made of patterns of emotions, language, thoughts, and memories surrounding the problem of money in your childhood household.
Your money story begins between the years of three and four when you observe, listen to, and absorb how the adults in your life discuss and handle money.
Your money story may be frightening or reassuring, but it is consistent with the lessons you learn as a child and as an adult.
The financial experiences we have as children have a lasting effect on our adult financial behavior.
These patterns of emotions, language, ideas, and memories are apparently established automatically in the brain from a young age.
Why is it important for children to learn about money?
Teaching children about money empowers them with the knowledge and skills necessary to effectively manage their finances in the now and in the future.
Parents/guardians who communicate to their children about money and give them responsibility for spending and saving from a young age likely to have children who are better with money.
Consider your personal money habits; did you inherit any from your parents or guardians?
What fiscally responsible practices can you tie back to your learning? Which poor financial practices can you link back to your learning?
Teaching children about money will assist make their financial security in the future. Therefore, the sooner you begin to develop their financial skills, the sooner they may begin to hone them. What are some of the financial skills we should instill in our children?
Money planning (budgeting): – By the time they are in pre-school, many children have begun to grasp the concept of money. They are typically interested in the world and eager to learn. This is a fantastic time to teach kids about saving, spending, and the importance of money.
Keeping money safe/saving: – It is prudent to provide children with a secure location to save their money. A money box or piggy bank provides a child with a secure place to store and save their money.
By the time of seven, the majority of years have already developed money habits. Discuss why keeping money safe is important and how you do so.
They must have equal access to a child’s bank account.
Should financial matters be talked openly in the home?
Many households prohibit discussions about finances. It is regarded as a “taboo.”
Many people avoid discussing money because it evokes intense emotions, disputes, and concerns.
Unfortunately, considering money as a taboo subject prevents us from developing better habits, practices, and perspectives.
It prevents people from placing money in its proper place in their life.
In my work as a money coach, I frequently find that a large number of people harbor repressed anguish, anxiety, and shame regarding money, which emerge in their relationships, careers, and self-esteem.
The unfortunate reality is that people’s spending habits, excessive generosity, excessive frugality, perfectionist tendencies, and indecisiveness can attract additional money problems if the underlying causes of their money problems are not addressed.
If we do not intentionally heal these money wounds, they will become our areas of self-sabotage, and we are likely to pass on these self-destructive money practices to our children.
To achieve a more favorable outcome in the tangible world, it is important to modify our inner relationship with money.
How can you encourage a child to save money and keep it secure?
Introduce saving by discussing what your child could purchase as their money begins to increase. Ask them thought-provoking questions, such as whether they would rather purchase the ice cream or save for something of greater worth.
Also, utilize addition to demonstrate how their savings will grow over time.
Even as adults, it can be difficult to determine where and how our money has been spent.
How can this ability be taught to children?
Money is based solely on numbers. Numerous people avoid internalizing numbers and frequently find that their hard-earned money slips through their fingers.
In my experience as a money coach, counting is an important skill for managing one’s finances. Lack of early exposure to counting is reflected in how people handle money.
Many people find numbers intimidating, and some may not even know things such as their income and how their net pay was calculated.
If you are unclear about your earnings, it is likely that your spending will follow suit, which explains why the phrase “I do not know where my money went” is so common.
Indeed, the individual cannot account for their hard-earned money. It simply escapes their control and leaves their bank account. When a person awakens to an empty bank account, they begin to question themselves.
Counting is therefore a good skill to teach children when introducing them to the topic of finances by providing them with a variety of coins to count.
Request that they count out various sums at various times. When they successfully count, give them one coin to place in their piggy bank. When they have mastered counting coins, help them comprehend the difference between coins and bills by moving on to counting bills.
How can one instill in a youngster healthy spending habits?
Start by having them assist you with your shopping. The weekly shopping trip is an excellent opportunity to demonstrate money management to children.
Show them how you plan your buying, such as by making a list of what you “need” as opposed to what you “desire” but can’t have unless you’ve saved enough money.
Check the cupboards before you leave, ensuring you have enough money, and asking them if they want to buy anything with the money in their piggy bank and determining if it is sufficient.
How should one respond when a child wants an item while shopping?
If they ask for items that aren’t on the list, tell them that you only have money for the items on the list; ask them to assist you find the items on the list and compare prices with them.
At the register, request that they place things on the belt. If you are paying with cash, have them hand it to the cashier. If you are paying with a credit card or M-Pesa, please describe the source of the funds.
Also, stress the need of keeping cash, credit cards, and PINs secure, and make sure they see you verifying the accuracy of the receipt.
How can children be taught to resist impulse purchases?
This age group is exceptionally adept at capitalizing on impulse purchases, especially when utilizing someone else’s money.
It is of the utmost importance to teach your children to avoid making impulsive purchases, since they might result in important disastrous financial outcomes. If your children develop the habit of impulsive spending, it is a difficult lifestyle to break.
Their emotional connection to impulsive purchasing drives them insane when they see something they desire.
We find it difficult as adults to refrain from this behavior. Children lack the maturity to comprehend and manage their emotions; hence, they end up requesting everything they see.
Encourage your children to create a budget using their allowance or wages, and ensure they adhere to it. This ought to be a monthly occurrence. They should create a budget for their short-term aspirations, such as candy, stickers, and glitter pens, as well as their long-term ambitions, such as a bicycle, musical instrument, or video games.
How can a parent educate their child the value of money and feel them from developing a sense of entitlement?
Work is one of the most effective ways of combating a sense of entitlement.
It’s not simply a matter of working and doing. Children must be taught to complete things with care and precision. They must realize that everything is enhanced by the passion with which it is performed.
Once your children understand that money is earned via hard, loving work, they will no longer be able to spend money on a toy without contemplating the effort that went into earning that money.
Certainly, they can and should enjoy a good buy, but working for it makes every purchase, even a toy or sweets, feel like an accomplishment rather than an entitlement.
Encourage them to discover the dignity of earning their own living and money (Shutterstock)
How do you eradicate the culture of handouts among children?
One of the finest ways to teach your children about money management is to allow them to make their own!
Motivate them to discover the dignity of working and earning their own money independently. The worst thing you can do is become a human ATM and offer money to your children whenever they ask.
Choose a handful of tasks that your youngster is capable of performing and attach a monetary incentive to each one.
As soon as your child completes a task, you should evaluate the work, express your satisfaction, and pay them. Pay them immediately upon completion of the task. They require a direct correlation between the task they performed and the payment they receive.
If payment is delayed, especially for several days, young children do not associate the activity with the reward.
What if the chores and responsibilities have no payoff?
You must counteract this by teaching them to develop an attitude of service even when no reward is forthcoming. Not all labor must be compensated.
Assign them some chores without compensation, but insist that they complete these jobs successfully.
At any age, teaching your children about money will need time on your part. It will not always be simple.
But if you want your children to be financially savvy when they are older, it is beneficial to invest the time now.
The tiny steps you take today can have a significant, quantifiable effect on your children’s future achievement.
