Fun ways to teach your child the value of money - Money - nation.co.

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MONEY

Fun ways to teach your child the value of money

Ms Maureen Wesonga. Through her All I Can Be savings group targeting children, she teaches the youngsters how to start saving at an early age, shop in a supermarket, make deposits and withdrawals in a bank, and other important money lessons. Photo/ANTHONY OMUYA NATION
IN SUMMARY

Tips to help your children get financially responsible

Start early. If they can count, they are old enough to start learning the basics of money and needs and wants. Play. There are an assortment of board and video games on the subject of money management. Find them. Budget as a family. Let the children help in drawing up grocery lists. If you are planning a holiday, let your children also use some of their own savings to finance the trip. Manage allowances. Even if you are giving your children Sh10, make sure that they budget for the money and ensure that they save at least Sh1 or 10 per cent. Reward savings. This can be done with a kind word or a congratulatory message if a savings target is reached. More ambitiously, you could match your childs savings shilling for shilling. Restrict piggy banking for older children. They should be taking their money to the bank. They should also be taught restraint and a locked piggy bank will not do this. Go to the market. Involve your older children in your money markets investments. Let the teens learn the basics of the stock market and government paper. Be honest. If the family cannot afford a new bicycle,for instance, be honest and involve the children in coming up with ways to solve the dilemm

The story of All I Can Be, a childrens saving group, starts with a chicken. Six years ago, Ms Maureen Wesongas four-year-old daughter, Shani, asked for a chicken. Not fried or roasted, as you would expect, but a live one. As Ms Wesonga found out, Shani wanted to rear the chicken for its eggs, which she planned to sell to earn pocket money. At first, just like many parents would do, Ms Wesonga brushed her childs request aside. Shani was too young to understand money that was her justification. However, after introspection she changed her mind. I realised that I was killing an entrepreneur. And if I was doing it, many other parents were surely in the same predicament, says Ms Wesonga. Soon after the chicken-and-egg story, Ms Wesonga quit her job and established All I Can Be Ltd (AICB), a company that teaches children various life skills, including how to manage their money. In 2010, the company established an independent savings and credit cooperative (sacco) whose primary focus was building investment portfolios for its members children. Today, 10-year-old Shani has saved enough money to enable her to make her first major purchase a mobile phone. Early in the business, Ms Wesonga realised that financial training would have to be rigorous besides being age-appropriate. At the time, she was trying to get local banks to support her business, but despite being a seasoned human resources practitioner with a good credit history, she faced tremendous stumbling blocks. If an adult with a credit history faces this kind of problem getting capital, what about 18-year-olds who have never saved a penny in their lives? Yet we encourage them to be entrepreneurs, she says. Through 12 online study modules, AICB takes children as young as five years through lessons on the value of money, savings, and investments. At her centre in Utawala, Nairobi, Ms Wesonga has simulated a supermarket and a bank. Here, children carry out practical tasks on money, say, budgeting for their shopping, depositing money at the bank, or even making mock withdrawals.

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Fun ways to teach your child the value of money - Money - nation.co.ke
Financial literacy The sacco has built a capital base of Sh600,000. But since Kenyan law does not allow children under 18 years to join saccos, parents do so on behalf of their children. An account is set up into which either the child or the parent may make deposits.

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Although the parents have the final say over the saccos investment decisions, they cannot withdraw funds from or take loans guaranteed by their childrens accounts. Once the children turn 18, they take over the account. The dragon of financial illiteracy that Ms Wesonga is trying to slay is complex. Research released by payment card company Visa earlier this year revealed that most mothers globally rarely speak to their children about money. For some, this is to protect them. They do not want them to be disturbed by the difficult state of the familys financial position. For others, there is the fear that secrets of the familys bank account balance may turn out to be common talk. Beyond this, there is also the widespread perception that talking about money, especially with children, is unseemly. When we were growing up we were told that if a child does not know about money, then it is a compliment. We were told that young children should not know about money, said Ms Elizabeth Mulongo, whose son, Joseph, has held an account at AICB sacco for the past three years. Keeping your children ignorant about finances is no longer pragmatic. It is becoming increasingly clear that children need to learn the value of money and know that it does not grow on trees. The earlier this lesson is understood, the better. Additionally, the cost of living keeps rising and despite the governments efforts to subsidise schooling, quality education is not cheap. By the time Joseph turns 18 and gains control of his sacco account, I want him to be able to borrow enough money to take himself through university just in case I am not able to pay everything for him, said Ms Mulongo. Start as soon as possible Although she makes contributions to the sacco account from her own pocket, Joseph has to also earn money to contribute to the account. He has been allocated chores in the household and payment is often negotiated for any extra work that he does outside his assigned duties. Literature on how early children should start learning about money is often contradictory, but many experts agree that as soon as a child can count, they should start learning about money. This could be anywhere in the three- to five-year range, depending on an individual childs development. A child at this age should also start learning to differentiate between needs and wants a lesson that many adults are yet to have knowledge of. As the child grows older, he/she can start learning about budgeting, shopping, and saving. Children should learn how to look for bargains. Taking the child along during grocery shopping could be a useful way to do this. Although the piggy bank is a good way for children to start learning the saving culture, by their early teens they should have moved on to more sophisticated modes of saving. AICB sacco is not the only savings product in the market. Nearly all the local banks trying to catch their customers at an early age have products for children. These ask for a very low minimum deposit and some offer competitive interest rates. I&M Banks young savers account, for instance, rewards all depositors who can go a year without withdrawing money from their account by doubling their deposit interest rate. Most parents will bring the children in with them to set up the account and when they make withdrawals. They want them to learn the processes and this is important, said Mr Suprio Gupta, head of marketing at I&M Bank. Teenagers who understand the basics of saving and investing should be taught about money markets. There are many websites that will allow people to carry out mock trading in such markets. Additionally, involving your child in the process of acquiring stock or trading in bonds could be an important eye-opener.

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