Nurturing millionaires

BY JOHN KARIUKI

Ms Kambua Makau, a mother of three, brought up her first child in the "normal" way. Whenever the boy needed anything, she would provide.

She progressed from buying toys and bicycles, to home video games and a laptop.

Like many parents, she thought it was inappropriate to let her son know the struggles she undergoes to provide for him, neither did she want him to know "too much" about money until he grew up.

Consequently, she never allowed him to handle money and would hide it from him to avoid temptations. When Makau’s son joined college, the demands became insatiable and unreasonable. The son would squander all the money meant to last for a term in a week and demand more.

Ms Makau added the figures and to her shock, she stamped her authority.

"It was a battle to show him that my income was not inexhaustible but had other goals besides babysitting him," she says.

Wise from the ordeal, Ms Makau taught her other two children about money quite early. "I began sending them to buy milk and groceries at the age of ten," she says.

"With time, I begin asking them to sum up the things I would send them to buy and calculate the balance expected from small denomination banknotes," she says.

She slowly introduced them to higher denomination banknotes.

Ms Makau would allocate them money for buying gifts and clothes and accompany them to actual shopping. "With time, they learnt the art of budgeting and bargaining which serves them well in their lives," she observes.

Now in their teens, her two last children have no problem budgeting their money.

Like Makau, people think their children don’t require financial education until they are in secondary school or college. Often, such lessons come too late in life. But the effects of financial illiteracy are costly in the long run.

Longer period

Having been brought up without financial education, there are adults who have grown up that salaries will never meet their needs unless they get better paying jobs!

Such people only budget when they have lots of money, for example, after taking loans or selling property!

Less money, including their regular salaries are squandered on worthless things.

Patrick Wandera, a banker, says financial education should begin early. Children should be taught how to differentiate the low and high value coins as soon as they are able to count.

"An adult can impart monetary skills by pretending to be a bank and exchanging money with his or her children," says Wandera.

One can exchange, say, Sh5 and Sh10 coins for fifty and one hundred shillings notes, respectively, advises Wandera. "Another money game is for a parent to ‘operate’ a store where his or her children can buy toys with real money," he points out.

Wandera Higher Loans education Board (HELB) model where university students are given education loans with a small stipend for their upkeep.

"In the old days of ‘boom’ one would get a lump some amount for a whole semester and blow it up in a matter of days.

He or she could then survive on the free food services at campus," says Wandera. But the present arrangement of cost sharing at universities has enlightened the entire generation about finances, he adds.

Zephaniah Muchiri, a Nyeri businessman, roots for daily financial prudence and education to kids. "The best learning opportunities are day-to-day activities like paying bills and making purchases," he says.

He routinely employs his teenagers when they are on vacation. "This way, they have a grasp of my cash flow and adjust their demands accordingly," he observes.

Muchiri, who started with ‘piggy banks, has nurtured his kids ‘home bank’ that have grown to bank accounts. "Once every few months we hold a counting session and the children buy things of their choice," says Muchiri. "As they grow older, I open bank accounts for them to deposit the wages I pay them from my business after work," says Muchiri.

Longer period

He advises people to teach their children saving culture at tender age. "Tell your children how difficult it is to earn money in the current tight conditions and how important saving for the future is," he says.

A little acknowledged fact of parenting is that often children take up their parents’ money prudence or carelessness, just as they pick up other habits.

The best that anybody can do is to be a money management guide to his or her children.

Parents ought to be open to leisure activities and take along their children on outings and holidays. They should not led kids go alone on secret spree as frequently happens otherwise children may think that splashing and having a good time are things done clandestinely with some undeclared funds.

As a result, such kids may see the routine "stealing" of a little money from their budgets and businesses to overspent as the norm. This may impact negatively on their future financial goals.