Financial literacy in the home

THE FINANCIAL landscape is getting increasingly complex, so financial literacy is becoming more important as a core skill for participating in society.

It is evident that many young people, including the well-educated, are not equipped to manage their financial affairs well. Training children at an early age to make effective financial decisions could be a meaningful way to effect change.

It cannot be too early for children to learn to choose between different financial options and to learn to manage money over which they have discretion. Although some schools and financial institutions may have programmes that encourage children to save, notwithstanding the limited ability of some parents to teach their children about the more complex aspects of financial management, there is still a place for the home in equipping children to manage their financial resources now thereby preparing them to do so when they get older.

I have often marvelled at the ability of individuals who earn low incomes to literally stretch their income to provide for their families because of the good sense they exercise in setting priorities and sticking to them and their uncanny ability to save even if they do not use the more sophisticated means generally applied by others better endowed with financial resources.

So although I strongly believe that financial education should be incorporated into the curriculum of our schools, there is a place for the family in training children to manage money well. This is a long-term process, but it can lead to long-term benefits, not just for the children, but for the children they wil,l in turn, be parents to when they become adults.

Parents can begin by discussing financial issues openly at home. Let the children understand how money is earned – the close link that exists between working and earning money or operating even a very small business and making money. Help them understand why there is a limit on how much can be spent from what is earned and why it is more important to spend on some items than on others.

Parents can allow their children to accompany them to the shop and observe how they go about the shopping exercise. Many parents go beyond that by sending their children to make purchases at the shop. This has been happening for a long time and can be used by all parents, no matter how humble, to