Life
| Jun 26, 2023

Money Management Tips | Lessons in financial literacy to teach children

Candice Stewart

Candice Stewart / Our Today

Reading Time: 6 minutes

Money management and financial literacy ought not to be limited to adulthood. Children need to learn as well. When you start with the basics of money management early in their lives, you can help them develop the skills necessary to achieve financial success later in life. This includes saving and investing to create and stick to a budget.

Early financial literacy lessons can give children an additional advantage when the time comes for them to make more significant financial decisions.

For Garvin Grandison, personal finance enthusiast, the earlier parents and guardians start money management lessons with their children, the better.

Garvin Grandison

“The importance of teaching financial literacy to children is to instill good money habits and a good attitude towards money from an early stage. The more positive the attitude and relationship towards money is, the easier it will be for the child to consider certain concepts like saving and preparing a budget when they become an adult,” he said, in an interview with Our Today.

“The discussion about your relationship with money comes from what you’ve been exposed to or what you’ve observed in childhood. So, it’s important for a parent or guardian to recognise indirect cues that they’re giving to children in terms of how they spend their money and they talk about money. Additionally, you want to move beyond awareness and move into what you do about it,” Grandison shared.

Find a structured way to talk to your child about good money habits. Get them to understand what money is and why it’s used. Teach them about earning money and teach them how to save money. Consider introducing them to investing money as well. It’s often overlooked but you should start as early as possible with at least the very basics and build on that. Start early so that it will be much easier for your child to develop a better understanding of money and build a better relationship with it,” he added.

There is much more to financial literacy for children than just using a piggy bank. There is: efficient money management, the importance of saving, and of course using new age and digital versions of the actual piggy bank. You could even use fake money and play Monopoly to teach financial lessons among other lessons.

Garvin Grandison, personal finance enthusiast

Lessons in financial literacy to teach children

Grandison told Our Today, “There is so much more to financial literacy for children than just using an old fashioned piggy bank. You also have: efficient money management, the importance of saving, and of course using new age and digital versions of the actual piggy bank. You could even use fake money and play Monopoly and turn it into real lessons to teach financial literacy.”

The personal finance enthusiast then shared five lessons that parents and guardians can employ if they have not already begun that process with their children.

Differentiating needs from wants: He suggests helping children to prioritise their needs over their wants in making financial decisions. So, in spending the money they saved, they should decide if the needed and required school book is less important than the PlayStation that they want to play games.

Talk about the value of earning money the legal way: Grandison said that adults should be careful with their choice of words, especially around children.

“Colloquially, we use a lot of statements around children that aren’t quite palatable. In the case of finances, words such as ‘scamming’ or ‘chop’ tends to paint the wrong narrative. Though adults may say them in jest, a child will take it seriously and believe that illegal means of making money is the right way and the only way. I’ve spoken with enough children, especially at the secondary level who legitimately believe that the only way to earn the high salary or buy the vehicle of their dreams is to ‘chop’ as opposed to working towards their financial goals by saving and/or investing,” he said.

Grandison said that adults should discourage the association of an honest means of living with ‘scamming’ and ‘chopping’. It feeds into the psyche and can skew one’s relationship with and attitude towards money. 

Banking and financial institutions: Grandison stressed exposing children to banks and other financial institutions.

“As small as they are, let them understand what a bank is and what an investment company is. Children, though young, now with the access to technology we never had immediate access to at their age. So, they can find out things for themselves. You don’t have to dumb it down. It’s even good to introduce banking terminology to them,” he said.

“As a matter of fact, take them to the bank with you and explain the different procedures. They may find the trip more exciting than you,” he added.

Garvin Grandison

Delayed gratification: In some ways connected to the priorities of wants versus needs, delayed gratification will teach children patience in acquiring items later on as opposed to making a purchase impulsively because they see something they want.

“Obviously, a child can’t earn legally, not immediately at least. So, they rely on their parents or guardians. Let’s say that you give them an allowance and teach them how to save. Use every day examples to teach them about waiting or sacrificing their impulsiveness in order to get what they want at a later time,” said Grandison.

“If you go into a store and your child sees an expensive toy that they want, explain delayed gratification by using a situation from your life that they are aware of. This could be you replacing your old vehicle by buying a new car. You probably had to delay purchasing that new car because more important things took priority or you needed to save more towards the purchase. The toy, in your child’s case, costs more than what they can afford from their own savings in that moment. However, if they really want it, they’ll save with the goal of purchasing the toy,” he added.

“It’s such a good lesson to learn. Delayed gratification is also good as it gives you the time to assess if you really want this particular item. Ultimately, making that final purchase after waiting a while makes you appreciate the purchase even more. Knowing that you were patient in building up your reserves to buy a particular item, carries more weight and sentiment,” he said.

The last lesson shared by Grandison was, giving back to the community. He said that it is important to constantly teach children at various stages of their development about building financial wealth and health.

“Build your financial wealth to the point where you have so much resources that can make you a cheerful giver as well. Children need to understand that they don’t operate in a vacuum and that there are folks in the world who are less fortunate that they are,” he said.

“Children should be taught that if they can save any amount, they should consider putting aside some of those savings for their favourite charity – if you’ve already taught them about philanthropy at that level. To bring it a little closer for them to grasp, if someone in their class doesn’t have any pencils or whatever standard material and your child an abundance, teach them that it’s okay to share. After consulting with you as their parent, they could even use some of their savings and purchase some of that material for their classmate. Let your child know that money is a powerful tool that can also be used to positively impact someone else,” he said.

Garvin Grandison has worked in the finance and economics sector for over ten years. He holds a BSc in Banking and Finance and an MSc in Corporate Finance from the University of the West Indies. He currently works in the banking sector where he has gained valuable insights into the financial industry and its regulatory landscape. He also serves as the district treasurer for the volunteer and community-focused organisation, Optimist International Caribbean District (OICD), a role that allows him to contribute to the OICD’s positive impact on communities.

‘Money Management Tips’ is a weekly feature highlighting general tips for managing your finances. Each week will see a feature on the ways you can strengthen your relationship with money and may feature other personalities in the Jamaican financial world. This weekly feature does not serve as a standard money management tool. Consult with your financial advisor for specified money management guidance as it pertains to your finances.

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