You help your child at every stage of their development by teaching them to walk and talk. However, do you also discuss money matters with them?
According to the Financial Sector Conduct Authority, more than 51% of South Africans lack financial literacy, making it impossible for them to manage their money sensibly.
A child’s ability to make decisions that are in line with their life goals is enhanced when they receive early financial education on topics ranging from budgeting and spending to sophisticated financial decisions like retirement planning and investments. Use these six tips to get going:
- Recognize debt: Recognize the effects of various debt kinds, interest rates, and repayment schedules. Equipped with this understanding, people can make well-informed choices regarding borrowing, responsible debt management, and avoiding spiraling into unmanageable debt.
- Consider the future: Meticulous planning and preparation are necessary for long-term financial success. Retirement planning, education savings, and estate planning are likely to be undertaken only by astute individuals who have a keen sense of financial future. By taking these steps, they protect not only their own finances but also the lives of those closest to them. At a young age, teach your kids how to make financial goals and introduce them to the concept of saving money by having them deposit some of their earnings into a piggy bank or savings jar on a regular basis.
- Big life events are important: Buying a home, starting a family, switching careers, and handling unforeseen emergencies are just a few examples of the major financial turning points that people encounter. With the right tools, financial literacy can help minimize stress and maximize positive outcomes while enabling one to navigate these transitions with confidence.
- Remain vigilant against fraudulent schemes: In the current digital era, financial scams and fraud are commonplace. Teach your kids to be wary of these unscrupulous individuals and to handle their personal and financial information with caution. Scams can be recognized and avoided by people who have a solid understanding of financial concepts and practices and who work in conjunction with a financial adviser.
- Learn from your mistakes: Your child may buy toys with all of their pocket money, leaving them with nothing for essentials. It’s alright. Recognizing your mistakes allows you to make better decisions in the future. You can easily accomplish your goals and become a wiser financial manager by taking the time to learn from your mistakes.
- Lead and involve them: You may believe that your kids are too young to understand money management, but by modeling responsible financial behavior and involving them in day-to-day financial activities like budgeting, shopping, and saving, you are preparing them for a future in which they will be in charge of their finances. To help your child understand the value of financial responsibility, take the time to explain your choices and the thinking behind them.
