Parents must start teaching their child the necessary money lessons early on to help them make a smart financial decision. Jamal is 30 years old; he got a job immediately after University and became a “high-flyer”. However, a few months ago, a pandemic happened, and he lost his job. He has been out of work for over nine (9) months and suddenly realizes all the financial “blunders” he made. Why didn’t anyone or his parents guide him? or why wasn’t he informed in school?

Jamal had a good job – one of the first things he did was get an apartment and get a car. Of course, he had to “upgrade” his wardrobe and include yearly vacations overseas as trappings of his new position. Jamal had no savings, no investment and no other income source but his “monthly paycheck”. Now his house rent is due, and he needs to take his car for repair. All the things he has spent his income on have been “liabilities”, not assets.

Jamal’s two main regrets – “I wish I had saved more.” and “I wish I started investing earlier.”

This is a typical story of what happens to a lot of people. With credit cards, it becomes worse where people are spending more than they earn and get into serious debt.

Research says most kids money habits are formed by age 7. As early as seven, kids have started exhibiting some money habits that will grow with them to adulthood. Invariably, for a child to have a healthy relationship with money, parents must start early on. Basic budgeting, delayed gratification, how to earn, when and how to spend are all essential money habits that kids must be taught to help them make a sound financial decision in the future.

Here are six things I wish my parents had taught me about money before I learnt them the hard way.

A Child is Never Too Young to Save Money.

It looks like more parents today are getting it right in this area. I have seen parents buy piggy banks for their kids to have them drop every penny friends and families gift them. How good, this is the basics of building wealth, and the earlier the kids know this, the better for them. As they grow older, introduce them to saving money in the bank, increasing the money through the bank’s interest rate, and when and how to spend. Your kids’ mantra should be “spend what is left after saving, not save what is left after spending. Introduce them to this income hack – give God 10%, give Charity 10%, save 20% and then spend what is left.

Investing Early

When you’re young, it’s easy to feel like you can’t afford to invest, but the truth is that every little bit counts. Also, inflation can easily “make nonsense” of your savings. It is important that beyond teaching children to save, you get them to start investing early. Also, It is not just investing but also to ensure they have a basic understanding of investments to make wise investment decisions.

Always Have a Budget and Stick to it

Find the best practical way to teach kids how to budget. Teach them how to put the spending plan on paper to keep track of their finances; this is one thing I wish I had learnt from my early years. Not against the expectation that even adults in their 40s still struggle with budgeting. Wait, how many times have you spent way beyond your plan? It is one thing to set a budget, and It is another thing to stick to it. To raise financially prudent kids, we must start teaching the act of budgeting early enough. Your kids are pointing at a toy brand in the kids’ store, and it is beyond your budget; the easiest way to quickly chip in the concept of budget here will be, no, this will hinder us from getting other things we plan to buy. If your child is like mine, he/she would ask why, and you just quickly let them know we budget 500 Naira for this. Let the word keep ringing in your child’s head from their early years; this is one of the best ways to get closer to financial freedom.

Spend money on items With Long-term Benefits

As much as it is good to spend money on taking care of yourself, it is equally best to consider spending more on things that can generate even more prosperity. This is one thing I wish I knew, particularly in my sophomore year. Cryptocurrency today is setting the cyberspace agog. Bitcoin was quite affordable for me as an undergraduate student, and if I had invested some part of my allowances on some units, I probably would be operating in millions today. So, I wish my parents had instilled in me the principle of being a wiser steward of financial resources.

Money is Earned by Giving Value

Find an opportunity to give value to earn more money. I have started teaching this to my kids through some everyday activities. The more value you offer, the higher your likelihood of making more money.  I wish someone had whispered this to me while growing up. I have seen kids on YouTube making videos and making money from it. I have also seen kids developing games for other kids to play and making money through it. The earlier we steer our kids in this direction, the better they become.

Delaying Gratification

One way to avoid debt is by delaying gratification  or avoiding the urge to buy immediately you realize you need it. Rather than saving for it, some would instead borrow to purchase it. Impulsive purchase or taking unnecessary loans for liabilities such as cars or holiday is not a good financial sense. Teach your kids practical ways of delaying gratification. Teach them to wait to buy something after saving for it rather than going straight for it.

When you’re young, it’s easy to feel like you have all the time in the world to start saving and investing, but before you know it, you’re 30 — then 40 and beyond. Life happens, and it moves quickly. And then we have nothing. As a parent, you need to ensure that you kick off teaching your child about crucial money concepts as early as possible.

Do you want to make learning about financial literacy fun for your child? You can check out our fun and colourful financial literacy activity book. Remember that you are your child’s greatest teacher when it comes to money, and they learn more from what you do than what you teach and say to them.