You teach your child to walk, talk and guide them throughout every step of their development … but do you also talk to them about finances?
Over 51% of South Africans are financially illiterate, which means that they cannot make informed decisions about their finances, according to the Financial Sector Conduct Authority.
Educating your child from a young age about financial awareness and responsibility, including everything from budgeting and spending to complex decisions like investments and retirement planning, empowers them to make choices that align with their goals in life. Get started with these six tips:
- Understand debt: Understand the implications of different types of debt, interest rates, and repayment terms. Armed with this knowledge, they can make informed decisions about borrowing money, managing debt responsibly, and avoiding falling into cycles of unsustainable debt.
- Plan for the future: Long-term financial success requires careful planning and preparation. Only financially savvy people with an eye on the future are likely to engage in retirement planning, setting aside funds for education, and creating comprehensive estate plans. These actions not only ensure their own financial security but also provide for the people they love the most. Teach your children to set financial goals from an early age, and introduce them to the idea of saving with a piggy bank or a savings jar where they can deposit a portion of their money on a regular basis.
- Life’s big moments matter: Throughout life, individuals face significant financial milestones such as buying a home, starting a family, changing careers, or dealing with unexpected emergencies. Financial literacy provides the tools to navigate these transitions with confidence, minimising stress, and maximising positive outcomes.
- Don’t fall victim to scams: Financial scams and fraud are prevalent in today’s digital age, so make sure your children know to be aware of these criminals and to be savvy about their personal and financial information. A strong understanding of financial concepts and practices, as well as partnering with a financial adviser, can help individuals recognise and avoid scams.
- Learn from your mistakes: Maybe your child will spend all their pocket money on toys and won’t have any left for something important. That’s okay. Understanding where you went wrong helps you make better choices next time. By learning from mistakes, you become smarter with your money and can reach your goals more easily.
- Lead and involve them: You might think that your children are too young to learn about or concern themselves with finances, but by showing responsible financial behaviour and involving your child in everyday money matters such as budgeting, shopping, and saving, you are preparing them to be in charge with their finances one day. Take the time to explain your decisions and the reasoning behind them, helping your child understand the importance of financial responsibility.
For more financial advice, visit Momentum, and for more on kids and lifestyle, visit Get It Magazine.
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