Last week I  attended a personal finance workshop that began with the audience being introduced to qualities of money. The speaker started by asking the audience how they defined money. It was interesting to note that most people have their own definition of money which works for them, but from the definitions - One group viewed money as a means to an end while the other viewed it as an end in itself.

Where would you fall?

At the end of the workshop, that was mostly attended by the millennial, one thing was clear. How one defines money will eventually determine how well, or badly, they spend it. This brings me to a question that has recently been gaining a lot of prominence when people talk about money- How do we teach kids about money ?

To answer that, we'd have to be aware of two mistakes we make. First,we always accuse the millennial of being reckless when it comes to money compared to generations before them. But, one thing that always stands out, albeit indirectly, is our failure to recognize managing one's money as a skill and the fact that the lack of this important skill can affect anyone with money to spend regardless of their age. A skill, in my own words, is knowledge put in practice. Secondly , our education system is based on teaching people skills that will enable earn money, mostly in way of employment, but not how to spend it.

So how do we teach kids about money? It involves a reversal of our own thoughts about money. Once we view managing one's money as a skill, then we know two things are involved- Knowledge and practice. This should guide how we teach kids about money and is best delivered using three vital topics ; how to make money, how to budget for the money earned and finally how to save some of it for a bigger goal. By doing this, they would automatically fall in the first group I talked of in the first paragraph of those that view money as a means to an end.

For instance, my little niece gets KES 50 weekly as pocket money. Not very much considering what that amount can do in our economy but the lessons she gets from handling her own money are a valuable asset for her future. She gets to learn how to grow the money by investing it in small entrepreneurial projects like buying bread to make sandwiches for resale. Her little project propelled by the profit motive makes sure at the end of the day she has more than she initially had. Basically what this does, apart from learning how to grow the small amount she gets,is that she is exposed to essential life and business skills like selling at such a young age. Of course after she earns some profits we don't just sit and let her spend it without a plan. This is where the all too important aspect of the budget is introduced.

Simply described as an estimate of the income and expenditure for a set period of time, a budget can really help kids understand how to balance their needs given a certain amount of money. At this point, with some help, they get to learn how to cut down expenditures through weighing of their priorities. The budgeting can be done weekly or monthly with some guidance. But care must be taken not to be too hard on the kid. They get easily discouraged if they don't get free reign on something they've worked for. Remember once they have the knowledge , mastery occurs overtime.

Sometimes it's difficult to explain to children why they can't get that expensive toy or an item they have always wanted. Obviously, most of them would resort to tantrums or sulking to force a purchase. Considering this and the 'dreamer' nature of kids, this can be used to their advantage by way of teaching them about saving. The Idea is to promise them the item at a later date but get a commitment from them to save for part of the item while you get to match the difference. The advantage here is imparting goal setting skills that are tied to finances. This acts as a great motivation that can inspire them into small time entrepreneurship or if they are already involved in money generating projects, channelling some of their profits to the goal.

In conclusion, teaching children about money need not be a theory class like it would be for an adult. Unless you're planning to offer the lessons with some candy, I don't see how you'll get them to concentrate and learn something. Also Different experiences can be used to deliver money lessons to kids but an approach that combines teaching them how to earn,budget/spend and save money should be considered.