Raising a Financially Literate Family
  • Jul 03, 2017

Raising a Financially Literate Family

It is not uncommon to find families who were once living comfortably in a nice house, driving a nice car or two, shopping in the city malls, and children attending good private schools falling into penury due to certain events. While the events that may lead to this are many and varied, for the purpose of this article, I will focus on financial mismanagement as the cause of this sad turn of events.

Why do people mismanage funds and put themselves up for the likelihood of a crisis? Would they act differently if they knew better? Absolutely. Why wouldn’t they? No one wants to suffer or place his or her family in a difficult financial situation on purpose, I should hope.

So I can safely infer that lack of financial literacy is one of the root causes of financial mismanagement which then leads to a financial crisis especially when the source of income, say a job, is lost.

The importance of financial literacy, therefore, cannot be overemphasized as the principal item in this discourse, money, is a pervasive entity affecting just about every area of our lives. You cannot deny that the world we live in today is largely run by money as this is the tool of exchange for meeting our basic needs of clothing, food, shelter, and education. It even serves the purpose for meeting other not-so-basic but important needs such as entertainment, recreation, and comfort.

It is important that families invest in the necessary education to gain financial literacy. Yes families, from father to mother to children. Gone are the days when money was the exclusive reserve of adult discussions; when children were not allowed to learn about money for fear that they might be corrupted or become greedy.

So how can families become financially literate? Let’s start with a look at what financial literacy means. I like the simplistic yet encompassing definition by Wikipedia that says “Financial literacy is the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it, and how that person donates it to help others”. It’s that little bit on donating to help others that makes this a great definition of the subject matter. So financial literacy will test your ability to understand financial concepts like earning, saving, budgeting, debt management, investing, goal-setting, and how you plan and make choices based on what you know.

It is now a simple matter of asking yourself how much you know about these concepts and how you can apply them to effectively manage your finances. Financially literate families try as much as possible to have every family member on the same page as regards finances because they understand the benefits that this offers. These benefits include family members having realistic expectations of what they can afford to have and what may be beyond their reach; they become prudent with finances especially when they understand the work that goes in to earning an income; and even in a wealthy home, financially literate family members are more likely to appreciate the value of hardwork and be grateful for the blessing of wealth.

To raise a financially literate family, as you can imagine, is not a walk in the park as it will involve lots of learning about the different concepts embedded in financial literacy, discussions on the concepts to stimulate learning and deepen knowledge; deliberate disclosure of important financial information for the purpose of transparency and even to source ideas  for making the best decisions on purchases or investments that cost lots of money.

Good sources of learning include books on financial literacy, financial journals and websites, business news programmes on TV and radio, and subject matter experts available in financial houses in our locality.

The world we live in today is such that you can find lots of information on any topic at your Finger tips. However, it is important that you are able to sift the good information from the loads of junk that are also readily available. Whatever you do learn and improve your financial literacy skills and encourage your family to do the same.

Ukot Umezinne is an Author and Learning Designer, and Chief Executive of the Abuja based, Life Skills Experts

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