How parents can raise financially confident children

Children can gradually learn that money does not have to sit unused; it can be put to work. [iStockphoto]

“Can I have this one too?” is a familiar question for many parents when shopping with their children.

At some point, most of us have had to explain that choosing one thing means leaving another behind. It may feel like an ordinary parenting moment, but it is also an early lesson in financial decision-making: money is limited, choices have consequences, and sometimes we have to wait for what we want.

Children begin learning about money long before they open their first bank account, earn their first salary or make their first investment. They learn from the everyday choices they see and experience at home.

The question, therefore, is not whether children learn about money. It is what they learn about it, and when.

Pocket money can teach budgeting. A birthday gift can introduce saving. A conversation about the cost of schoolbooks or a family outing can help children understand priorities and trade-offs. These small moments can gradually shape how they think about money and the choices that come with it.

Yet financial education often starts too late.

The 2024 FinAccess Household Survey found that only 42.1 per cent of Kenyans demonstrated high financial literacy based on their understanding of concepts such as inflation, interest rates and risk diversification. At the same time, the proportion of adults who save declined from 74 per cent in 2021 to 68.1 per cent in 2024.

These figures should make us pause. For years, the financial inclusion conversation has rightly focused on access: getting more Kenyans into the formal financial system. But the next frontier cannot simply be access. It must be capability, helping people understand how to use financial tools to build resilience and wealth. And that conversation should begin much earlier than adulthood.

And that education can begin at home.

Parents do not need to be financial experts to teach good money habits. An allowance, for example, can become a simple budgeting exercise. Instead of spending everything immediately, a child can be encouraged to divide their money between something they want now, something they are saving for and, as they grow older, perhaps an investment for the future.

This gives them room to make small decisions, experience small mistakes and understand the consequences in a safe environment.

Children can gradually learn that money does not have to sit unused; it can be put to work. This is where the distinction between saving and investing becomes important. Saving helps preserve money for future use, while investing provides an opportunity for money to grow over time, with the understanding that investments also carry risk.

For children, one of their greatest advantages is time, which gives young investors a significant edge. The longer money has to potentially grow and compound, the greater the opportunity for consistent contributions to build over the years.

This means that when parents think about preparing their children financially, the question should not only be, “How much can I put aside?” It should also be, “How early can I start?”

KidNest is one example of how the industry can help make that shift possible. Launched by Britam Asset Managers with an initial investment of KSh1,000, it gives parents, guardians, and relatives a structured, accessible way to begin investing for a child's future.

But the value of an investment account goes beyond setting money aside; it also offers a practical way to teach financial literacy. These lessons are difficult to learn from a textbook but become meaningful when connected to a child's own financial journey.

Financial literacy should therefore mean more than knowing how to save or avoid unnecessary debt. It should also help young people understand how wealth is built: the role of investing, the effect of inflation, the importance of diversification and the relationship between risk and return.

For parents, the journey does not require complicated lessons or financial jargon. It can start with pocket money, a birthday gift or a simple conversation at the supermarket.

For the financial services industry, our responsibility is to make the next steps-saving, investing and building wealth-more accessible and easier to understand.

And for Kenya, building a stronger investment culture may ultimately depend on how early we begin.

The portfolios of tomorrow may start with the pocket money of today. But the most valuable investment we can make in our children is not simply putting money aside for them. It is handing them the knowledge, habits and confidence to make that money work for their future.

- The writer is the CEO, Britam Asset Managers