In a world that is constantly evolving, there is no greater gift a parent can give a child than the ability to be financially independent. Teaching about money from a young age can be life-changing. Today’s parents must equip their kids with the skills needed to navigate the world of personal finance.
Here are five skills that could propel your child to a lifetime of financial success.
Budgeting is a skill that serves us well throughout our lives, so introduce your child to it early on. Start by discussing sources of income, like allowances or part-time jobs, and expenses, like school supplies and activities. Teach them to allocate money for different purposes and constantly reinforce the value of saving for short- and long-term goals. Help your child create and stick to a budget and you will empower them to make smart financial decisions that pay off in future.
Instilling saving as a habit in your child is a gift that keeps on giving. Carl Coetzee, CEO of BetterBond, recommends that you encourage them to set savings goals, like saving up for a video game or a holiday. Start talking to them about saving when they’re young and explain the power of compound interest in growing their savings. “Open a savings account for each child so that they can see their money grow. This makes them better at delayed gratification and lays a strong foundation for a solid financial future,” advises Coetzee.
“Teaching a child about investment is part of preparing them for the future. One of the biggest investments they will ever make, is purchasing a home. It is never too early to start teaching the value of owning their own home one day. Make sure they understand that this will provide more than a roof over their head – it is an asset that usually increases in value over time and could set them up for life,” says Coetzee.
Teaching a strong work ethic and an entrepreneurial spirit from an early age could foster independence and resilience in your child. Encourage them to take on age-appropriate chores and engage in entrepreneurial activities, like making and selling crafts, offering garden services to neighbours, etc. Youth unemployment in South Africa is worryingly high (62.1% in Q1 2023 for job seekers aged 15-24). Entrepreneurship will therefore play a big role in future economic growth – not only in South Africa, but across our continent.
Didi Onwu, Managing Editor: Youth & Investors of the Anzisha Prize, says, “Secondary and tertiary schooling used to be gateways to formal employment, but the reality of the contemporary labour market is that there simply are not enough traditional jobs to absorb the young population, even for those who may receive an excellent education. Adverse economic conditions, along with a mismatch between the skills taught in schools and those demanded by employers, have worsened youth unemployment, so it’s in your children’s best interests to have ongoing conversations about economic opportunities. Entrepreneurial skills are foundational to success in an ever-changing environment, so it’s vital to start preparing young people now for that future.”
While financial skills are crucial for future success, it’s also important to teach your child about giving back. Dalit Shekel, Brand Consultant at Relate Bracelets, which raises money for charities and creates jobs for the underprivileged, says, “As a parent you can lead by example by contributing a portion of your income or dedicating some of your time to a cause the family cares about. Engage in meaningful conversations about social responsibility and how their actions can make a positive impact on their community. By encouraging empathy and generosity, you’re instilling in your children a sense of purpose and fulfilment that goes beyond financial gain.”
It’s never too early to start teaching a child about money and setting them on a path to financial independence. The skills and habits they develop now could shape their future and enable them to thrive.