How To Ensure Your Children Are Financially Literate Part 1 Of 5

How early should we teach our children about money? I am no financial expert but my guess is as soon as you can. Soon begins when you give them money to go to the shop, when you start to give them an allowance. 

They need to understand what money is and that it has a value.

Severally principles can easily be applied

1.   Accounting for you allowances
2. To get money you need to work for it
3.  The principle of saving
4.   The Loan principle
5.    Investment or work

When you read the autobiographies of the world richest men you will find that they started to be interested in money from an early age. Our aim here is to educate our children so that they can get out of the rat race. And yes this could well be the stepping stone to the building their empire.

At 13 years Bill Gates had used his talent and created a software program. He is the founder of Microsoft and current Chairman of Microsoft. (ref Wikipedia)

Richard Branson’s first successful business venture was at the age of 16. He ran a magazine called the STUDENT. (ref Wikipedia)

As a child Warren Buffet displayed an interest in making money. He went door to door selling chewing gum, coca cola and weekly magazine. (ref Wikipedia)

The list goes and on but it drives the point home.

Let us look at each principle in more details

1. Accounting for your allowances

As we give our children allowances we need to teach them to be accountable for the same. An allowance sometimes is the first encounter that we have with money. How we treat that same could form the foundation of how our children will handle money as they grow older.

Let us just take a simple accountability template. The same can be discussed weekly or as frequent as the allowance is given

Week 1	source	Money In	Money out
Day 1	Allowance	100.00
Day 2	Savings		10.00
Day 3	Community		13.00
Day 4	Juice		14.00
Day 5	Transport		11.00
Day 6
Day 7
		100.00	48.00
Balance		52.00
Week 2	source	Money In	Money out
Day 1	Balance for week 1	52.00
	Allowance	100.00
Day 2	Savings		10.00
Day 3	Community		13.00
Day 4	Juice		14.00
Day 5	Transport		11.00
Day 6
Day 7
		152.00	48.00
Balance	104.00

The template is easily adaptable in an excel format or even handwritten in a handheld notebook.

This will reduce the opportunity to misuse the money as they will have to discuss have they have spent any money given.

These discussions can be opportunities to give advice on how else the child can spend his/her money.

With time this becomes a habit and the discussions can be eliminated altogether.

How to ensure your children are financially literate Part 2

Why it Pays to Invest in Gold

Simple Expalnation of Debt Ceiling


Simple Guide to Late Payments


Damaris Musinguzi is the Author of 10 things your children should learn about money. She also runs an online business  Utensils r us which is one of the first in Kenya.