Perhaps our kids are among the luckiest who have never lived through any major disasters such as war and natural hazards. So, the likelihood of their exposure to repercussions of such incidents is also most likely negligible. Having said that, the recent COVID pandemic is an absolute example where millions of families with children were affected and are still impacted. Rising poverty is one of the top outcomes of any global crisis. The level of uncertainty this crisis has created globally is profound. According to the world bank, more than 100 million people may have entered extreme poverty as a result of the pandemic. This is a major setback in achieving SDG#1 – No Poverty by 2030.
In our last post, we learned about SDG# 1 and how we can encourage our kids to take action on it. But, had it ever occurred to you that perhaps a major crisis might affect your child in future, too? The current widespread ambiguity around the global economy neither guarantees security for us nor for our kids. Albeit, we can prepare our kids for the future and give them the skills they will need to build resilience. How? By educating them on Financial Literacy.
Money management is something we deal with in our day to day lives yet, not often deem it to be an essential lesson for our kids until they are grown up. I strongly believe a child is ready for serious money lessons before or latest by age 7. A study from the University of Cambridge on habit formation in young children states that children by age 7 understand the impetus of money habits and transactions.
Money is not just for things you want
I will never repeat this enough: we need to avoid the mistake of introducing money as a gift or as a treat to be spent on sweets and toys. This reinforces a wrong perception of money and children grow up for many years believing money is for whatever they WANT. If we want to build our children’s resilience for a moment of financial hardship in life, we need to make sure that the overarching money message they grow up with is that money is for the things you NEED.
Earn, Save, Spend… and more!
A piggy bank is not enough. Give your children 4 jars, download our labels below, let your child colour them in and you’re ready to go: it’s time to introduce the notion of investing and giving! We will be sharing more about these two topics as we go along. Whenever your child earns or receives money, encourage them to divide the money among the jars. Explain to them that money in the Spending jar is for immediate use and money in Saving jar goes towards more expensive things we need or would like to have. Importantly, the Saving jar alone is not enough to help our children shape their financial future.
So let’s introduce the Investing jar: this jar is for later in life – this is first and foremost your resilience jar. The notion of investing might still be too abstract for a small child, but the notion of “you never know what might happen in life” is one you can introduce to your small child. The investing jar is also for all your big life goals – but for now, let’s start with resilience because, without a resilient basis, there is no way to achieve any bigger goals.
The Giving jar is for the money that your child would want to share with people in need: it’s the “Be nice to other people” jar. This jar invites you to discuss with your child how they can help others who are less fortunate in life.
Starting with SDG 1 and progressing the conversation from there – we will be supporting you in this dialogue over the course of the next blogs, exploring all the SDGs. We want to support you in every way we can on your financial parenting journey, so you are fully empowered to shape your child’s financial future. Let’s continue the conversation to build a generation of financially resilient children, who are wise in their money choices and can help others in dire need, too.
“So earn all your pennies by working so hard, and save lots of pennies to show you are smart. Take care of your savings so money can grow. And off on your journey through life you will go!”
(Book 1, A SMART WAY TO START)