I was lucky enough not to have made huge financial blunders while growing up. Being raised by a struggling single parent, I didn’t have the money to be stupid with. Because my family was always so broke when growing up I was super careful and I never spent money I didn’t have. I am all grown up now and fortunately most of my nephews and nieces haven’t grown up under the same circumstances.

That’s why I worry.

They really don’t know how hard it is to make money. I started working at an early age of ten, fetching water for my neighbors at a small fee. Lucky enough, that was a booming business for me since my neighborhood frequently experienced water shortages so I could make some money off that. My nephews and nieces don’t know what it’s like to go without. I want to make sure they don’t fall into the same financial traps other people do.

The question is how?

After extensive research and through my personal experiences, here’s the approach I’ve taken so far:

Talk

I’ve talked to my nephews and nieces about my experiences growing up and I think that’s helped.
It’s important to talk to our children about our financial situation in real-time. If you are experiencing financial difficulties at work or in your business, tell them about what is happening and what it means to all of you as a family. Of course try to put it in perspective, explain that you are not going to be homeless or won’t go hungry, but that things might get tough and you’ll be forced to scale down. You’ll learn that by doing so you’ll be doing them a favor. Your kids will know that financial problems do exist and talking about them will reduce their anxiety and prepare them for any unfortunate eventualities.

Stay calm

Kids think of money like you and I think of water. You go to a tap, you turn it and water comes out. For kids we are their taps. They don’t understand how we earn money and what it takes. You can’t expect them to really “get” that until they experience it for themselves. With young kids, you have to remember that they have limited experiences and just can’t understand if fully. That’s why I encourage my nephews and nieces to work as soon as they can. With or without a college degree, any job can be a great job. Take me for instance, I started working at the age of 10 and that was my foundation to responsible financial management. I remember my mom encouraging me to work, she didn’t force me to but constantly reminded me that I had to earn my own money.

Encourage them to love spending money

You probably think I’m nuts….. but let me explain.

Very often kids think of saving as the opposite of spending. Not so. You can either spend money now or have money to spend in the future. You can either spend money on something you don’t value or wait and spend the money on something that’s truly important. Frame it that way and you’ll see your kids embrace a new attitude towards current wasteful spending.

Let me illustrate this point further. I was in class 8 a couple of years back and I didn’t have a cell-phone but really wanted to own one, a Nokia 3310 to be precise. Since my mom wasn’t willing to buy me one, she gave me the option of saving up for one. It took me close to a year to save up for that phone. The little money I got, that I could have easily spent on junk, went straight into my wooden money saving box since I had set my eyes on getting a phone by the end of my primary school education. To cut the long story short, I managed to rise about Kshs 4,000 and got myself a secondhand colored screen Sendo cell phone. That was the proudest moment of my life since I felt like I had truly earned that phone.

Put them on a budget

Give them a fixed amount and let them do with the money as they sit fit. Advise them often, but let them make their own decisions and accept the consequences. When they blow it don’t bail them out. This will teach them to be responsible with their money in the future.

While I was in college my mom divided up my support money into 12 monthly installments. She didn’t pay upfront for my tuition, room or board. She added it all up then divided it by 12 and put the amount in my account each month. Through that I further learnt to work within a fixed income.

My childhood experience with money has taught me valuable lessons when it comes to managing my finances. Money doesn’t grow on trees and if our kids learn that early, they’ll grow up to be very responsible with their finances. Once kids understand that money isn’t like water they’ll understand that money is a limited resource that must be spent wisely. The bottom line is to give them as much experience as possible in handling their own affairs and refusing to bail them out.