How to raise kids with smart money habits

If you grew up in the 90s or earlier, then you would attest to the fact that money conversations were held in hushed tones in the safety of our parent's bedrooms. Most children were not privy to how money was generated or how much went into major bills like house rent or school fees. It was almost taboo to track where money came from or how much was used in the home.

Money conversations were introduced later in life, mostly after high school. But you were not supposed to get a job before joining college because if you started 'touching' money at that age then you would not focus on your studies. Well, enter the year 2023 and financial literacy for children is almost a must topic in most households.

From piggy banks to allowances to saving up for toys and video games, there are many ways to save money and use it. What are some of the good money habits that children should learn from their parents to make them more responsible adults?

According to Sam and Wahu Kibaara, parents of two children aged 13 and 12, adopting a shopping list is one of the money habits that they religiously practice. They put down all the items they need to purchase before leaving the house and tick them as they pick them up in the supermarket/food market.

They started teaching their children this habit at an early age and it saved them from calming down tantrums in the supermarket because the child could not get a certain toy or candy. Now that their children are in their teenage years, they have adopted the same habit before shopping for anything. This has instilled money discipline in the family.

While most parents go for 'piggy banks' to encourage children to just save up for desired items like toys, Wahu and Sam got their children transparent containers/piggy banks partitioned into three compartments. One for their savings; another for giving and another for spending. They got them the transparent home banks because children need to watch as their money grows as opposed to 'saving' mysteriously in opaque home banks.

They say the partitioning has taught their children other uses of money besides saving and they are not allowed to pick from the other partitions once they exhaust what is in one.

This helps the children understand how money works; from not spending what you do not have to saving up for what you need and also having a heart of giving, principles echoed by Waceke Nduati the founder of Centonomy Limited, a financial consultancy company.

Waceke says that how parents relate to money is important because children observe and pick up the habits and energies around money. If parents have bad spending habits or are in debt, it will show up.

If you are only happy when you get money it will also show up and children will be observing and learning from you.

For example, a statement like "I do not have money" is carelessly used in most homes, but children still observe when money is spent on luxurious items or when guests visit and money is lavishly spent on foods and drinks that ideally the parent would not afford.

It teaches the child the non-critical circumstances in which to 'break the bank' for.

On the flipside, parents also need to be careful not to cultivate a selfish attitude in their children. As children save, they also need to learn how to be responsible by contributing to the household expenditures as opposed to them spending the money they have saved on toys or candy only.

They should be able to buy some household items like bread or tomatoes from their savings. That way you bring up responsible adults who no matter where they live can always contribute to the day-to-day running of the home they live in.

We have seen cases where working relatives or children do not contribute even a dime to the running of a home yet they live in that home and live off what is bought by parents/guardians.