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How to teach your child Financial Literacy

How to teach your child  Financial Literacy

Parents no longer appear to be financially literate when it comes to their children just like our parents did with us back in the days. We make effort to educate our children, teach them about etiquette and all, but we all think that this topic is too big for their young minds to worry about how wrong we are.  The sorry thing is that schools do not find it important to add in their curriculum, yet we expect all school leavers to succeed even when they know nothing about management and sustenance of money. Our children should be taught the basics of money, it is absolutely important. In fact, being financially literate should begin as soon as a child knows how to say dad or mum ‘buy me this” till they grow and become independent. Most dysfunctional homes that we have today are as a result of mismanagement of funds and high maintenance children. Being financially literate will lead to stable homes in the society.

Sometimes ago a friend gave her nine years old son a one thousand Naira note to buy snacks of two hundred Naira, the boy just got his snacks and left his balance with the shop attendant because he did not know he was supposed to ask for his balance; meaning that the boy has never purchased anything in his life and does not know how to buy or sell.  Back in our days at that age, you have started running errands to the neighborhood shops, so even if you don’t know your mathematics you will understand simple transactions like buying and selling.  His mother took it for granted and felt he should know but am glad she took a decision to teach him the practical use of money.

Teach your child the Values of Financial Literacy?

First we need to define this term. Being financially literate is the ability to make informed and effective choices on how to manage your income (earned) and expenses (spending), personal finance, debt, investments, savings, budgeting, for a lifetime of financial security. If being financially literate or savvy will help them in making good financial decisions we should begin by teaching and inculcating the following values in them in order for them to attain self-sufficiency, financial stability and freedom.


It is best practice to give your children pocket money to enable them begin to make informed decisions on how to spend their money, but make them earn it and definitely not without monitoring.  That way they will value every little money they have and become less demanding. Take them to your office or business place once in a while even if it is on weekends so they see that you actually put up some work to earn your salary or wages.


Why does a child need to bother his or her mind with the rigors of budgeting you may ask, but the truth is that everybody budgets, we might not budget as experts but budgeting helps us in planning. Budgeting enables you to determine/itemize your needs, place value on them, and decide on what, how and when to spend your earnings.  Let them be involved in planning your household income and expenditures as well. Take them to markets and malls and while you at it have a list of things to buy and make sure to follow it. Be sure that there is a budget for their pocket money.  Check their budget and monitor for compliance.


Emphasize that savings is a must for everyone and so they should save at least 20% or more of whatever they make no matter how little. Kill the “over demanding” and “reckless spending” attitude in them.  Let them understand that money is not easy to come by and so they should place value on every little money they have.  Say no to their irrelevant demands and explain why.  Make them save gradually from little gift money from relations, pocket money and any little money they make into their Piggy banks or bank accounts that you have opened for them.


they should know that their expenses (spending) should at no time surpass their income (earnings) because this will make them bad managers of their money.  So encourage them to always subtract their spending from their available income to know if they are within their budgets. Do this by taking them along with you when you haggle and make purchases.


Teach them about different kinds of investments, use things within your reach and their understanding. Make them research about investments and make out time to discuss their research with them if possible allow them to practice it especially during holidays. But be sure to show them the investments you made both the good and bad ones so they can learn from it.

Borrowing:  Our parents never failed to remind us that “he who goes a borrowing goes a sorrowing” let them know that in as much as they need to borrow money for something, they should first weigh the options whether the borrowed money will bring returns and if it is for a good cause.  Money borrowed for frivolities or materialism becomes a bad debt but that which you borrow for investment into your future is for a good cause and a good debt.  Let them know that borrowing should be their last option at any time.

Giving: Teach them the habit of giving and expecting nothing in return.  That way they will be less greedy and not selfish thereby becoming useful to the society at large. It is important for them to also know that money cannot solve everything this will help them make good and informed decisions in future. They must see you give good gifts at all times both in cash and kind like contributing selflessly to community works.

These few values and others that you can come up with, based on your financial ability, will create a good financial literacy foundation and balance in their lives.

Thanks for reading kindly comment, make contributions and ask questions we love hearing from you.

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