1.   Give an allowance
Each family has its own rules about allowances but often it is the only way kids can learn to interact with money. Allowances give children the chance to be responsible with their cedis as well as learn to save and decide how to spend it. To start, you can give a child from the age of eight as little as 50Gp per week or you can attach the allowance to a chore you have asked them to do e.g. putting their toys away at the end each day. If they complete the chore, they will be given their allowance.
 

2.   Practice what you preach
Talk to your child about money. Share with them your values regarding saving, giving and spending so they understand these concepts when they see you do it. Let them know that with any money they receive or earn, they can choose to either save, spend, or give it to someone else who needs it.  
 

3.   The difference between needs, wants and wishes
Often when children first get allowances, they immediately want to satisfy their wants, so they buy sweets and cheap toys. Gently point out to them that these are not essential and that cheap toys are easily broken and sweets are soon eaten. Over time they will begin to make smarter spending decisions.
 

4.   Teach them to save towards a goal
Now that they know about money, teach them to save.  The next time your child whines and requests the latest gadget or toy, try this: ask them to save towards it. This means either they can save some of their allowance or the money Grandma gave to them. Make sure that the purchases are cheap, teaching them that saving doesn’t always have to take a long time.  
 

5.   Hold their interest
You can teach your child about earning interest by offering to match their savings. For example, tell them that anytime they are able to save GH¢10, you will give them an additional GH¢5. This acts as an incentive and allows them to see their money grow. As they get older, you can expand the teaching by discussing how money can earn interest. Make sure you use a calculator to show them how much they have the potential to earn if they decide to save their money. This also paves the way to talk to them about opening a bank account in their name.
 

6.   Tracking the cash
Don’t wait until they start earning before you teach them to keep track of their money. They can keep a little notebook to record how much they save and on what. This later forms a basis for budgeting and helps them understand how they spent their money.
 

7.   Teach them to shop wisely
When shopping with your child make it a game in which they find the same product or a similar one for a lesser price. Not only does this show them that often they pay a lot more for brand names, but it is also a great time to talk to them about value and quality. Talk to them about being economical and what is worth paying for and what is not. For example, a pair of leather shoes is worth paying extra for, but not a colouring book. Take the time to also discuss planned purchases and unplanned purchases. This way your child is learning how to be a bargain shopper and savvy spender.



 

* Copyright to NDK Financial Services Ltd. First Published in Today's Parent Magazine July/August 2008