A friend of mine requested me to design a home based financial literacy program for his children. He told he wanted his children to be different and to understand how to manage money from an early age. This way they would be able to handle their finances well, make prudent investment decisions, and take care of the family estate. The children are currently in senior two, senior one, and primary five.
So I did some research and came up with something suited for them. The program we designed for them consisted of four parts. The first part was a savings kits for all the children. The second part was a board game based on the popular “rich dad poor dad” book by Robert Kiyosaki. The third element was financial literacy coaching. The fourth part was about transferring the learning into real life. The parents managed to raise the required funds and we purchased the necessary items and literature. A coaching session was scheduled and I showed up last weekend at their home to engage with the kids.
I was utterly amazed when I interacted with these young people. Despite their youth and age they were able to grasp the key principles of handling money and investment. I watched keenly as they played the “cash flow board” game. I inquired of their understanding of the decisions they were making. The young one told me that she didn’t want to have many kids because children were very expensive to maintain. She said she prepared for down sizing by maintaining a lot of cash and investing in stocks. The young man preferred to invest in real estate. This is because the cash flows were positive and you could easily get a mortgage to finance the deal. The young lady was now bent on becoming a Doctor or an Engineer because these were the highest paying professions in the game. I was impressed that they could all record and maintain proper financial statements including an income statement and balance sheet. They understood what passive income was and how to increase it. They knew the difference between a credit card and debit card. They knew how to set financial goals and how to achieve them. They knew the difference between the “rat race” and the “fast track.” One of them was appointed as the “banker” and was in charge of all financial transactions.
Thereafter they showed me some of the projects they were doing to make real money. They showed me the crotchet bags, scarves, purses and jewelry they had made. They also performed a “paid” variety show for me. I ended buying two crotchet bags and paying for the variety show. Then we brain stormed on how to expand their business enterprise. In the end we agreed that they will develop a one year business plan and present it to their parents and request for investment. They will also separate responsibilities among themselves. One of them will be in charge of marketing, the other finances, and the other one will be in charge of product development. The parents will act as marketing agents and investment partners. They also agreed to come up with a brand name and logo for their business. Eventually they will use social media to market their products. The proceeds from the business will be saved and reinvested. Only a small proportion of profits will be paid out for personal use.
The parents have since opened up investment accounts for all of them. The parents deposit a portion of their allowances and pocket money into these accounts. The kids routinely invest in treasury bills and unit trusts. Apparently the youngest is the “richest” one and the others envy her.
What is key to note is the central role the parents are playing in ensuring their children are financially literate. The parents are willing to invest the time and money to ensure that their children are prepared for real life. The parents realize that traditional education can only take their kids so far and it’s up to them to make a difference.
Inherently these children have learnt how to achieve financial independence and I am so proud of them. I must say that when I visited this family I showed up as a financial expert but left as a student.
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