Sunday, June 23, 2024

COVID-19 Money Lessons to Share with Kids (II)

At stated in the last edition, discussing money issues with our kids can be stressful, especially during this period. However, the good news is, these are changes that when communicated well, can be life-long lessons that will prove valuable to our kids. 

I also stated last week that the first, and probably the obvious change that occurred involved parents and kids spending more time together, at home. This was an opportunity for parents to get creative and create low-cost home-made meals and Do-It-Yourself projects.

I ended last week’s commentary by stating that the COVID 19 pandemic may have heralded unprecedented times, but there are valuable lessons that we can impart in our kids.

This week I want to start by stating the obvious – the COVID-19 is a global pandemic whose repercussions will be felt for years to come. However, many lessons emerge from such an experience, from public health to personal finance. The pandemic presents an opportunity for nations, businesses and families to reflect on the financial lessons learned during this period. Parents can also find practical ways to impart such lessons to their kids. 

As stated above, in our last article we discussed three money lessons that parents can impart to their kids, 1) you don’t need to spend to have fun, 2) giving to the less priviledged, and 3) adaptability. In this article, we will focus on three more lessons that parents can share with their kids. 

Firstly, the crisis has reinforced the importance of saving, especially through an emergency fund. Such funds became critical during this period where some families experienced salary cuts. As much as it was a heart-breaking experience, it can be an opportunity to teach kids the importance of putting money aside for a rainy day. An emergency fund is also critical in cases of a pricey medical procedure or unexpected house repair. 

Secondly, the crisis has taught us the importance of spending smart. This largely involves having a budget and sticking to it. Kids should be taught from as early as six years the importance of writing down their expected income against expected expenses. They should be able to differentiate between needs and wants. With scarce resources, budgeting remains critical to staying afloat. Developing the habit of budgeting can also help kids avoid unnecessary spending. Comparing prices and doing your homework before any purchase also forms part of spending smart. During this period, being smart with our finances is a key ingredient to financial wellness. 

Lastly, the pandemic reinforced the need to diversify our investment portfolios, be it in business or at a personal level. Investing or saving money in different asset classes minimises the risks of losing it. During this period industries such as hospitality and travel were adversely affected. This implied loss of revenue, which resulted in salary cuts, and in extreme cases, retrenchments. The good news is, diversification allows one to have various streams of income. In case one fails, you can have income from the rest. These are some of the lessons parents could impart to kids during this period. 

As we continue to take the necessary precautions during the COVID-19 crisis, let us remember to have money conversations with our kids and share our experiences. As much as many people may be financially stressed during this time, it is not an excuse to avoid money talks with kids. Being honest and open will help your kids gain confidence and become comfortable with the subject of money.

Disclaimer: Otisitswe K. Tawana-Madziba is the founder of Fin-Edu, a social enterprise that empowers young people with social and financial education. Email: [email protected] or visit: www.fin-edubw.com 

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