My Money

Olebile Makhupe | Monday November 1, 2010 00:00

I felt so rich and responsible, just to know there was an amount of money that I was directly responsible for!!! I used to be preoccupied with thinking about how I would spend it once I was allowed access to it- not really having a proper concept of its value, I even dreamt I could buy an entire ice cream combi and wake up to that delightful music each day, and the wonders that lay within!

The point is, knowing my parents had started a savings account for me encouraged me to think responsibly about my spending habits, and gave me a goal to work towards. Could I one day have a hundred Pula in my account? I believed it was possible...

While researching for this topic, I came across a very interesting article by the Family Association, who suggested the key to financial intelligence might lie in parents knowing just how much information to communicate to kids according to their age. They also suggested setting goals by age could ensure a measured influence on children about their attitudes towards money, as well as helping parents recognise what could motivate  kids of different ages. Here are some of the goals they recommended for kids of different ages:

Goals for kids Aged 6 to 10For parents, this could be the easiest age to make a good impression on your kids as their brains are still somewhat malleable, and they are not yet set in their ways.

Kids are also very curious and absorb a lot of information that will later influence the choices that they make about life. While in the earlier years most will not know the true value of money, there are still some lessons that you can instill, such as:

Identifying money: Teaching your kids how to identify money of different values, for example, 25 thebe from 50 thebe.Making Change: At this age, most kids are having their first dabble with mathematics, so you can support the lessons by teaching them practical skills like making the right change, and giving the right amount of money for the cost of items they wish to purchase.

Being Responsible for money: If they lose the P1 that you gave them, they need to appreciate what that means, so instead of replacing it right away, let them know the impact of losing that coin; it means they will not be able to buy what they wanted to since they do not have it anymore. Sounds harsh, but, am sure you get the idea...

Understanding that things cost money: Kids need to understand that all the material things they have in life were purchased with money, from the clothes they are wearing to the house they sleep in, the food they eat to the shoes on their feet.

Handling an allowance: Giving your child a weekly allowance helps you achieve many of the objectives we have already spoken about, and much more: they will learn to appreciate the value of the money you give them, how much it can buy, learn to take care of it, and manage their expectations of how to ration the money. You can also use this as an opportunity to start teaching your child about saving money, especially if they wish to purchase an item whose cost exceed their allowance amount.

Ages 11-13Along with an increase in other responsibilities such as household chores, you should expect your child's repsonsibilties on the way they deal with their finances also increase. According to the Family Education, some of the things you should expect your child to able to do reasonably well include:

Setting up a Savings Plan: Your child needs to be able to think beyond today and tomorrow, and may want to start saving for, say, a day out with friends.

Setting up a savings account: It may be time for an introduction to formal banking, opening up a savings account with a financial institution.

Giving to charity: Your child at this point should learn the most valuable lesson when it comes to money 'blessed is the hand that giveth...'

Shopping wisely:  Is it better to buy a remote-controlled car or to take a couple of friends to watch a movie?

Youths aged 14-18By this age, your kids are able to make their own independent decisions on some aspects of their lives, and by age 18 most are moving out of their parents' house to go to college. Because they are also now exposed to much higher amounts than they were dealing with before, it is absolutely vital that they have the right relationship with money at this age.

Some of the goals you can set for your child include:Saving for College: Educate your child to independently support themselves aside from the government grants and parents' assistance.

Getting a job: Nothing teaches more about the value of money than having to work for it.

Learing about investments: General information about different types of investment options is vital at this age, even if your child does not necessarily have those investments.

Understanding budgeting concepts: Money isn't infinite so your child should know how to allocate the minimum allowance you give amongst the things they need.

Learning about credit cards and other debt: While you may not be ready to give your child a credit card of their own, you can teach them about debt and the pitfalls of having too much of it, at this age.

Olebile Makhupe is the Head of Global Markets at Standard Chartered Bank Botswana. For Feedback and contributions please e-mail--mymoney@mmegi.bw