30 August 2012

Uganda: Money Lessons for Your Kids


Many parents have a soft spot for their children and often find it hard to say no to their requests. The dilemma parents face today is balancing the role of catering for children's needs without spoiling them.

Today's generation is more exposed and has unlimited access to information, which makes it a challenge for parents to keep up with their demands, as the kids try to conform to their peers.

There is no clear cut measure of what it acceptable or not because individual circumstances vary, but what most parents agree on is that the needs must be within reason.

Raising your kids with good financial values and exposing them to money lessons at an early age is the best gift you can give them because financial literacy is a lifelong skill.

If you do not instill the values of hard work in them, you will not be in position to demand that they manage their financial affairs prudently.

It is your duty as a parent to assess whether you are spoiling your kids or not. If you always say yes to all their requests for money and gadgets, you need to change. And if you borrow money to buy stuff to please your kids, you are treading on dangerous ground.

It will be a challenge to change and say no to their request, especially when they want to compete with their peers. Learn to say no with a simple explanation.

For example, explain to them that you cannot afford to routinely replace a gadget simply because they were careless and lost it. For a spoilt kid, expect some tantrums, but this gets easier when they start appreciating your new stance.

Always remember that if you allow your kids to over indulge, you are nurturing a bad habit of over reliance on you, which may later breed a culture of borrowing to finance a lifestyle they cannot afford later in life.

Teach your kids what it takes to earn money and expose them to the fact that in life, one cannot always get what they want. By doing this, you are teaching them the concept of delayed gratification.

Your children need to be told the importance of saving now for future goals. Most parents open for their children savings accounts. If they are old enough to comprehend this, you can introduce to them the reason behind this initiative and ask them to participate by getting them piggybanks.

They should keep a record of all the money that they save. Related to that, kids who are given allowances should be taught to save some of that money for future use.

The next step is to teach them the concept of earning. You can do this by giving them tasks in the house and paying them a token fee for purposes of demonstrating this concept.

Children need to be told that whenever they ask you for money, you have to forego something to satisfy their demands. To drive the point home, ask them what they will be willing to forego to make someone happy.

To have kids appreciate the new turn of events, you have to practice what you preach. It would be unfair to talk about careful spending and then go on a spending spree. If impulse buying is your indulgence, you have to work out ways of changing your behaviour.

Participation is a good way to have your children on board. Ask them to come up with ideas about how to reduce excess spending.

Involve them in the household budget and drawing up a list of household purchases. Allow them to accompany you for your shopping trips so that they appreciate why purchases should be budgeted for.

Admittedly, some kids are more exposed to financial literacy from their schools, which can be a challenge for parents who are struggling with managing their finances.

That notwithstanding, parents must strive to instill values of hard work and prudent financial management so as to nurture responsible children.

The writer works with Bank of Uganda

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