Tuesday July 1 2014

How parents can raise financially literate children

A child receives money from an elder. Some parents work hard

A child receives money from an elder. Some parents work hard to accumulate their wealth yet their children are quick at squandering it. file photo 

By James Abola

Sometime back, a gentleman I had not seen for close to 10 years called at my office; I was happy to engage with him after such a long time while he, on the other hand, had sought me out because of what he had read and heard about my services as a consultant and coach.

After we finished discussing the business need that he had mentioned at the beginning of the meeting, he brought up one more issue.

I later realised this was the main issue that had brought the gentleman to my office; one of his children had completed his university degree two years before but failed to find employment.
It pained me that a retired dad still had to be now making the rounds to attempt to pry open the doors of opportunity for his son.

The experience of this parent reminds of me of the quote attributed to President Museveni when he spoke at the formal opening of the Acacia Mall in Kampala. According to www.chimpreports.com: “Another problem Museveni noticed was, rich Ugandans producing stupid children. This has become an epidemic now.”

“Some people work hard and put together a lot of wealth, but they bring forth stupid children who come and squander all the hard-earned wealth.

These too should learn from how the Mukwano family have continuously maintained and multiplied their wealth through the generations,” the President is quoted to have said.

Some people were annoyed by the president’s remarks but I think there is some element of truth in it. My view though is not that rich people (you may include educated people in that lot too) produce stupid children but rather that rich or educated people tend to raise financially ignorant and emotionally unintelligent children.

The rich parent
Being rich or well educated provides a parenting disadvantage.

The very advantage that the rich have of being able to afford life’s comfort becomes a distinct disadvantage when they need to motivate their children to be interested in education or wealth creation.

When the now rich fellow was a child, their family was perhaps poor and used a papyrus mat for a mattress; at that point it was not hard to get the motivation to be able to afford a mattress when one is grown up.

A rich person cannot use the same “work to escape from poverty” motivation that his or her parents used.

Motivation is an aspect of emotional intelligence. Whether rich or poor, all parents should strive to develop the emotional intelligence of their children or dependants.

In addition to developing motivation, parents need to develop the other domains of emotional intelligence, namely: the self-awareness of the children so that they can be self-confident without being arrogant; the self-regulation of the children in areas such as self-control, personal responsibility and trustworthiness; social awareness in areas such as empathy and service orientation; and social skills in areas such as communication, leadership and conflict management.

Financial literacy
Financial literacy is the other area which the rich parents ought to emphasise to their children. It is possible or even easy for children to think that money is easy to get and sustain.

Children need to know how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others.

Unfortunately, when you go to any school visitation day in Uganda, you will see parents competing with each other to flaunt money in total disregard of principles of financial literacy.

I know at least one rich parent who is an exception. When his children complete primary schooling, he sends them to a ‘normal’ boarding secondary school for their secondary education. There the children learn to eat beans and posho, take cold showers and use pit latrines.

The man does not allow any of his children to own a mobile device until they have completed Senior Six while other parents give smart phones to their seven-year-old children.

No child is born stupid but poor upbringing; the failure to develop the emotional intelligence of children and the failure to provide them with financial literacy is what makes them to become stupid with money when they grow up.
The writer is the team leader of Akamai Global, a business and finance consulting firm. Email: james.abola@akamaiglobal.co.uk