Parents have the profound responsibility and privilege of shaping their children’s relationship with money. In a world where financial literacy is very often lacking, equipping our kids with the knowledge and skills to navigate their financial lives with confidence and wisdom is one of the greatest gifts we can give them.
As many young adults leave school and enter the “real world”, they often find themselves ill-equipped to navigate the complexities of personal finance. Despite the crucial importance of money management skills, financial literacy education remains lacking in most school curricula. Students may graduate with little practical knowledge of budgeting, saving, investing, credit, taxes, and other key financial concepts they’ll need to make sound decisions.
This deficit can be especially pronounced in South Africa, where financial planning is further complicated by economic inequalities, fluctuating exchange rates, and an array of unique banking and investment products. Young South Africans face the added challenge of understanding context-specific financial tools like tax-free savings accounts, retirement annuities tailored to the local marketplace, and diverse community savings initiatives.
Financial education should begin early, with simple concepts introduced through everyday experiences. Even children as young as three or four can start to grasp basic ideas like exchanging money for goods and making choices based on limited resources. As they grow, we can provide hands-on opportunities for them to handle real money, whether it’s through an allowance, earning money for chores, or managing a small budget for a specific purpose.
Encouraging goal-setting is another key aspect of financial literacy. By helping our children identify short-term and long-term financial goals, teaching them how to choose their most important ones and then breaking them down into manageable steps, we foster a sense of purpose and motivation. As kids get older, introducing the concept of budgeting becomes easier. Discussing how to allocate money between spending, saving, and giving, and encouraging them to track their income and expenses, helps them develop a sense of financial responsibility and control.
While topics like investing might seem complex, we can make them accessible and relatable for kids. Discussing how companies grow and change over time, and how owning a piece of a company (through stocks) can be a way to share in its success, can spark an early interest in the world of investing. We can also take advantage of the many apps, games, and online resources designed to teach kids about money management, making learning about finance fun and engaging.
Perhaps most importantly, as parents, we must model the financial behaviours we want to instil in our children. Being open about our own financial goals, decisions, and challenges, and demonstrating the value of saving, delayed gratification, generosity and thoughtful spending, can have a powerful impact on our kids’ attitudes and habits around money.
Teaching kids about money management is an ongoing journey that requires patience, consistency, and adaptability. As Benjamin Franklin is purported to have said, “An investment in knowledge pays the best interest.” By providing our children with the tools, knowledge, and support they need to make informed financial decisions, we empower them to create their own financial destinies – a foundation that will serve them well throughout their lives.
