“Rich old people are more attractive than poor old people, so by all means, try to get rich before age sets in. Otherwise, you’ll just be playing catch-up for the rest of your life and that will just wear you out, let me tell you.” – Jill Conner Browne
Most of us grew up hearing our parents say that their biggest goals in life were to build sufficient funds for our education and marriage and also to lead a financially independent life in their post-retirement days. Thirty years later, the long-term financial goals of a couple in their late twenties are on the same lines. The difference here is that while our parents depended solely on fixed deposits, PPF, EPF, and physical gold to meet these goals, we, on the other hand, have a variety of options at our disposal. However even today, a majority of investors still follow their parent’s footsteps when it comes to planning for their goals. Children are our leaders of tomorrow, but how ready are they for tomorrow?
Many adults have made devastating financial decisions that they could have avoided if they had been introduced to the basic concepts of money early. Financial literacy is not in our school curriculum so we must be intentional about equipping the next generation about this important aspect of life. Teaching children good money habits can help insulate them from making serious financial mistakes later in life. Let us, together, raise a generation that understands money matters.
A great start to teach children and teenagers about Money is a Piggy bank.
Children should know the importance of keeping money and having savings, a piggy bank is one way to go. A transparent jar can serve this purpose, it is cheaper and that way, the child can watch the money grow. This may create excitement and they are propelled to do more. This shouldn’t just be enforced by parents but teachers as well by being an example to your children. A study by the University of Cambridge found that money habits in children are formed by the time they’re 7 years old. Little eyes are watching you, set a healthy example for them and they’ll be much more likely to follow it when they get older.
A lot of parents and guardians do not know about this but, education insurance is a strong way of saving and catering for your child.
Educational insurance resembles life insurance in many ways but is tailored specifically at ensuring the future educational needs of your children are met. Generally, this means that a lump sum will be paid out to your children on an agreed date in exchange for your monthly premiums.
A good education insurance policy will generally take into account factors such as inflation and tax to ensure that your children get the right pay-out to complete their education. Some policies even include extended benefits, such as paying towards your child’s marriage or providing a lump sum for the child to use outside of education needs. A lot of insurance company in Nigeria provide this service.
Most parents in Nigeria believe Trust funds are for the wealthy or for white people.
Why not? An Average Nigerian is more focused on the needs of the ‘now’ and the near future. Educational trust is available in banks and other financial institutions all over the country. Educational Trust fund offers you (parents) estimate the cost of education of your child, using key parameters. It then offers parents the ability to choose your most preferred contribution plan. After which, school fees of the child, will be paid directly to the school and in a case of death or permanent disability of the parent, there is an insurance cover to cushion the effect on the child’s education. Of course, you can pick the number of years this will continue and the period of contribution. This way, you are Providing funds specifically for your child’s education.
The term life insurance provides coverage for a certain period, such as 10, 20 or 30 years, and pays a death benefit to the beneficiary if the insured person dies during the term. Like every other insurance, you may be familiar with, a premium is paid every month, quarterly or yearly, depending on the insurance company you visit. Life insurance for children is a way to save money for kids and to “protect their insurability,” meaning their chance to buy more life insurance later in their lives no matter their health. You can buy some coverage on your child’s life if you purchase a term life insurance policy covering yourself or your spouse. You do this by buying a rider — an extra policy feature at added cost — that extends a small amount, such as NGN 50,000 in life insurance to other family members, including children. This is the only way to buy term life insurance on a child; there aren’t standalone term life insurance policies for minors. Another option is, you can buy a permanent life insurance policy, such as whole life, covering your child. The best part, it is available in insurance companies all over the country.
You can also try Mutual funds- wondering what that is? ;
A mutual fund is an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional fund managers, who allocate the fund’s investments and attempt to produce capital gains and/or income for the fund’s investors. In operating mutual funds, there is a ‘’Parent/ Child association’’ section where you can open a mutual fund account for your child, even as a minor. This account will be operated by the parents of course but the personal information will be that of the child but contact can be that of the parent. The child can go ahead and operate the account when he is old enough and can understand its purpose or use. This fund can be used for the child’s education as well.
With all the time you have at hand, you can think of setting up something for your children, born and unborn. Let us know in the comments if you need further clarification or even other suggestions.