Rose Miller, grants manager at the JN Foundation, is recommending that parents inculcate financial awareness in their children at an early age.
“It is essential for raising a child,” she insisted. “Teaching children how to become financially aware at an early age will help to develop in them good money-management skills and other habits which will help them throughout their lives”.
The JN grants manager, who has responsibility for the foundation’s BeWise financial empowerment programme, posits that from an early age, children should be exposed to financial literacy as it helps them to understand the value of money.
“It helps them to understand how to earn it and grow it, manage it, and generally how they can navigate the financial arena, which can be quite intimidating.
“Our young children are like sponges; and their creative minds are constantly picking up new traits. Therefore, it is the best time to inculcate excellent saving habits,” she pointed out.
Miller explained that these saving habits should be actionable. This requires parental involvement. Opening a savings account for their children is one way parents can kick-start their children’s journey to financial independence.
The JN Foundation grants manager said that the opening of a savings account is a demonstration of a commitment to the process and that the action will have positive, far-reaching implications for families in the future.
“Parents could start by purchasing a ‘saving pan’, or repurposing any suitable receptacle, such as a large plastic water bottle, where their children can deposit their spare change.
“As children get older they can be introduced to the 10-10-80 formula, which recommends that they save 10 per cent of any money they receive. This practice is a solid way to ensure financial security when they become adults,” she advised
She continued: “Teach your child the concept of disciplined saving by ensuring that they add to their savings regularly; teach them that in the long run, consistency will pay big dividends. They should also be encouraged to have a saving goal and to be committed to that goal and not dip into their savings prematurely. Move money from their savings pan to their bank account at intervals,” Miller advised.
She said children can also be taught the concept of delayed gratification by encouraging them to save towards achieving personal goals and objectives, such as expensive toys, gifts for friends/family, and entertainment outings.
“It is perfectly appropriate to add to your children’s savings effort, using the opportunity to teach them how interest on savings is calculated.”
Miller stated that parents can also help to expand their children’s knowledge base on finance by spending time watching educational videos about financial literacy with their children on websites and on YouTube.
“There are also many books which can be accessed free of cost on the Internet. Over time, children will become more financially savvy, and will naturally elevate their conversation from saving to investing as they become aware that investing is where real wealth is created,” she underscored.
The JN Foundation’s BeWise financial empowerment team leader also pointed out that along with financial literacy, it is important for parents to prepare financially for their children’s education.
“As you plan for their training, you should also make the necessary preparations for them to access tertiary education. If parents succeed in these two areas, they would have provided their children with a solid platform to not only enable their own financial security, but also by extension, the financial success of the country,” she explained.
Miller asserts that as the level of financial literacy increases, the level of financial inclusion in the society will increase, which will have a positive impact on the economy.