While this generation seems to have come late to the financial literacy table, it doesn’t have to be the same for our children. It isn’t too early to start exposing them to the truth about money. In fact, according to researchers at the University of Cambridge, money habits are formed in children by the age of 7. So starting off early is important.

Financial literacy is something Nigerians are beginning to take more seriously; given the recent wave of awareness from different quarters on the essence of financial education, and the stiff economic environment, there is an urgency to manage scarce financial resources wisely, and also learn ways of growing extra funds.

Growing up, talks about investing in treasury bills or money market mutual funds were not things we heard about. The truth is, most of these financial instruments were not even available when we were growing up. So the talk about money and how to invest it wisely wasn’t a thing back then.

But times are changing, the world is evolving. We now understand the importance of financial skills in navigating life. If we had the kind of knowledge available now about money when we were growing up, we would definitely be better positioned financially.

While this generation seems to have come late to the financial literacy table, it doesn’t have to be the same for our children. It isn’t too early to start exposing them to the truth about money. In fact, according to researchers at the University of Cambridge, money habits are formed in children by the age of 7. So starting off early is important.

The question is: how does one teach children about money? Where do you even start from? There are different ways of inputting money lessons in children (most of which will be discussed subsequently), but the most important thing is starting them off with the right mindset by being an example for them to emulate.

It is a known fact that children learn a lot by merely watching what is done around them. Your actions and words about money shape the ‘money mindset’ of your children.

Most of us have the wrong mindset about money because of the way our parents and guardians talked about money or reacted to issues of money. I remember growing up, most of the ‘money conversations’ around me were about how hard it is to get a well-paying job. So somewhere in my subconscious mind, I believed it was difficult to get a job that pays above a ₦100,000. It took a lot to break out of that mindset. Hence, it is important we portray the right money habits for our children to imbibe.

To create a wealth mindset in children, you need to use the right words around them. You need to exude positive ‘money energy’ around them. So you select your words. Instead of saying things like, “I can never afford that,” say, “I’ll work toward buying that in the next couple of weeks or months.” Instead of “It is impossible to make it in this economy,” say, “The economy might seem tough but there is always a way out.”

You should also involve them in planning for major expenses – like changing the car or buying a major appliance for the house. Show them how you are saving up for the expense or how you intend raising money for the expense, and window shop online together, to see the options available to you.

Discuss your preferred brand and price with them. Let them know why you prefer the brand and the price. If possible, take them along with you when buying the appliance. These are some of the ways your actions will create the right money mindset in your children.

It is also important that you let them understand that money is a scarce resource, hence, the need to prioritize when spending money. Let them understand the difference between ‘wants’ and ‘needs’. Explain to them that needs are essentials that we cannot do without. You can drive this point home by showing them your budget for the month or your shopping list. Show them how you listed the essential needs first and then guide them in drawing up a budget or a spending plan with their needs coming first.

One other way of creating the right financial mindset in children is to introduce them to the concept of value creation. It is a known fact that the amount of money an individual is able to earn, is tied to how much value the individual can bring to the table.  It is important that we make children understand that their ability to create solutions to everyday human problems determines how much money they can make. You can do this by making them earn their allowance, or better still, guide them in raising money for something they want to buy. Help them identify products they can sell or services they can render in return for money.  This would go a long way in making them understand that value creation is key in making money.

Your actions about money also speak volumes. Don’t have an argument about money with your spouse in front of your kids. If there is a disagreement about money, resolve it when they are not around.

In subsequent articles, I’ll share more on how you can incorporate the right money habits into your kids, from as early as 3 years old. And if you have any questions, send them to me through the comment section. Let’s raise financially responsible children together.

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