After your child gets an allowance or begins to make money, the next step is to ensure he or she knows how to manage the money. For example, your child has a handful of Naira notes and is eager to go to the shopping mall to spend it all in one afternoon. What do you do? Do you let him do as he or she wishes with that money? There is no hard and fast rule. It all depends on the age of the child and what he or she has been taught about how to manage money.

As soon as you start to dispense an allowance, you should match that act with direction on how to use the money. If you don’t, your child may waste money on frivolous things and be short on cash for the things he or she really needs. More importantly, he will develop poor spending habits that will be hard to break as he grows older. I know of a child who used to immediately spend all the money that came into his possession on whatever he wanted – usually comic books and fun places. Today, that child is a highly successful professional who still spends his money without any restraint – now on cars and gadget. He’s constantly short of cash for the things he needs, and he even had to borrow money from his brother a number of times. The solution to his problem is that he needs to learn to gain control over his money. He needs to know how to save for the future while spending the balance wisely now. The same way bad habits last for a lifetime, so does good spending habits. I know of another child who had limited allowance and learned to spend it very carefully. He had enough each time to borrow his fellow mates and he usually will charge interest on it. As an adult, he has maintained these skills and is able to manage his money properly.

Schools generally do not focus on teaching about money, so as a parent it’s primarily up to you to educate your child in this area.

The future to a young child may mean the arrival of summer at the end of the school year; it’s impossible to think about growing up, going off to the university, and even moving out on his or her own. This, however, does not change the fact that the future is closer than he or she thinks. As adults, time seems to go more quickly than it did as a child – what seemed like years away now passes in the blink of an eye. In teaching your child about the importance of saving for the future the following should be considered:

• What he or she is saving for

• What he or she has to put away to get there

• How long it will take him or her to reach the savings goal

For example, if your 13-year-old wants a tab that costs N40,000, he should know that if he puts N1,000 a week toward this wish, it will take him 40 weeks (or about ten months) to reach his goal. He can probably handle the math himself, but you’ll have to encourage him to do it.

If your child sets a goal that would realistically take her years to reach, there’s nothing wrong with agreeing to match her savings or contributing to her savings fund. For example, if your 10-year-old wants to save up for a bicycle that’s going to cost N10,000, you might suggest that she save N500 each week for two months (eight weeks). He would have saved N4,000, and you can pay the difference, which is just roughly half the cost of the bicycle.

We will still look at setting goals for saving in more details. The important thing to note here is that your child should get the idea that saving is a part of being grown up enough to have money.

– Gbonjubola Sanni