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In Kenya, financial literacy is not a core subject in the school curriculum, not even in the recently introduced competency-based curriculum (CBC) which leaves many young people without essential money management skills.
However, parents and guardians can take the initiative to teach their children about money from an early age. By instilling good financial habits early in life, children can grow into responsible adults who understand the value of money, budgeting, saving, and investing.
Here are six practical and well-explained ways to teach financial literacy to your child at home:
1. Introduce money through everyday transactions
One of the simplest ways to teach children about money is to involve them in everyday financial activities. When shopping, explain how money is used to pay for groceries and let them hand cash to the cashier.
For example, if you're buying bread that costs Sh100 and give the cashier Sh200, ask your child to calculate the expected change. This hands-on experience makes money tangible and fosters a basic understanding of transactions.
Also ask them to take the change and not to spend it on other things to teach them not to spend recklessly
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2. Encourage saving with a goal-oriented approach
Teaching children the value of saving is essential for their financial future. Instead of just giving them a piggy bank, help them set savings goals. For instance, if they want a toy costing Sh1,000, encourage them to save Sh100 every week from their pocket money.
This method teaches them discipline and patience. You can also introduce the concept of delayed gratification by explaining that saving over time allows them to buy something better in the future.
While they save also chip in and add extra money which will teach them about the power of compounding and how money well saved earns interest.
3. Differentiate between needs and wants
Children often struggle to understand the difference between needs and wants, which is a crucial financial lesson. Take a trip to the supermarket and discuss the importance of buying food and school supplies before considering luxuries like sweets or toys.
For example, if your child insists on buying a video game when the family budget is tight, explain that food, and clothes come first. This helps them learn prioritisation and smart spending.
While children may not understand this concept early in life, it will come in handy when their brain matures. Additionally, engage them in budgeting exercises where they allocate an imaginary income to different categories, helping them internalise the concept of prioritisation and financial discipline.
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4. Introduce earning through chores and small tasks
No work, no pay, instead of simply giving your child an allowance, introduce a system where they earn money by completing small tasks.
For instance, you can reward them with Sh50 for washing the car or Sh20 for tidying up their room. This instils the understanding that money is earned through effort and not just handed out freely.
Over time, they will appreciate the value of hard work and develop a strong work ethic.
Additionally, as they grow older, introduce them to entrepreneurial thinking by encouraging small-scale ventures such as selling handmade crafts or even starting to them how to use their talents.
5. Lead by example and have open money discussions
Children learn best by observing their parents. If they see you budgeting, saving, and making wise financial decisions, they are more likely to adopt the same habits.
Share real-life money lessons with them, such as how you budget for groceries or save for a family trip. For example, if you're cutting back on eating out to save for a holiday, explain how small sacrifices lead to bigger rewards.
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This makes financial literacy a natural and ongoing conversation in the household. Demonstrate budgeting techniques, such as listing expenses before shopping or comparing product prices to maximise value.
The more open and honest you are about financial matters, the more comfortable they will be discussing money and making sound financial decisions in the future