Mothering & Money 

5 key financial lessons mothers should be teaching their children

Mothering and money with Momentum

As a mother and as a parent, it is your duty to prepare your children for whatever challenges life may throw at them. Of course, if the last few years have taught us anything, it’s that survival depends on financial security. Momentum Financial Adviser, Jessica Pillay, says it’s best to start instilling core financial lessons early in a child’s life, or else they may fall into reckless financial habits.

“We need to face the fact that we live in a country where most people don’t know how to manage money,” says Pillay. “Financial literacy is a problem, and it’s up to us to empower our children with the right financial advice before they go on a dangerous and costly tangent.” 

According to the Financial Sector Conduct Authority (FSCA) data, over 51% of South Africans are financially illiterate, which means that they cannot make informed decisions about their finances. With mothers usually taking the lead in teaching their children to walk, talk, and guide them in all other aspects of their development, Pillay believes it makes sense to also teach them about financial management from the start.

“Financial literacy is a gift that keeps on giving. When individuals are financially literate, they are better equipped to educate their children and pass on valuable financial knowledge and habits to future generations.”

From budgeting and spending to complex decisions like investments and retirement planning, a solid foundation in financial literacy empowers our children to evaluate options, consider risks, and make choices that align with their goals in life.

If you want to start raising a financially aware child, then Pillay provides a few lessons you can teach your children:

Financial lesson 1 – Understand debt

Debt is a common financial tool, but its management requires careful consideration. Financial literacy enables individuals to understand the implications of different types of debt, interest rates, and repayment terms. Armed with this knowledge, they can make informed borrowing decisions, manage debt responsibly, and avoid falling into cycles of unsustainable debt.

Financial lesson 2 – Plan for the future

Long-term financial success requires careful planning and preparation. Only financially savvy people with an eye on the future are likely to engage in retirement planning, setting aside funds for education, and creating comprehensive estate plans. These actions not only ensure their own financial security but also provide for the people they love the most. Pillay suggests helping your child understand the value of saving and setting goals. Introduce them to the idea of a piggy bank or a savings jar where they can deposit a portion of their money.

Financial lesson 3 – Life’s big moments matter

Throughout life, individuals face significant financial milestones such as buying a home, starting a family, changing careers, or dealing with unexpected emergencies. Financial literacy provides the tools to navigate these transitions confidently, minimising stress, and maximising positive outcomes.

Financial lesson 4 – Avoid financial criminals

Financial scams and fraud are prevalent in today’s digital age. A strong understanding of financial concepts and practices, as well as partnering with a financial adviser, can help individuals recognise and avoid scams, protecting their hard-earned money from exploitation and fostering an understanding that financial criminals exist and target normal everyday South Africans. 

Financial lesson 5 – Learn from your mistakes

Making mistakes with money is normal, but it’s important to learn from them. Maybe your child will spend all their pocket money on toys and won’t have any left for something important. That’s okay. Understanding where you went wrong helps you make better choices next time. By learning from mistakes, you become smarter with your money and can reach your goals easily.

Pillay says this is only scratching the surface of financial topics that children could benefit from understanding. Lead by showing responsible financial behaviour and involving your child in everyday money matters such as budgeting, shopping, and saving. Take the time to explain your decisions and the reasoning behind them, helping your child understand the importance of financial responsibility.

“With the right information, financial literacy can empower our children by demystifying financial jargon and concepts. This will help them feel more confident engaging with financial institutions, asking pertinent questions, and advocating for their own financial wellbeing,” – Pillay

Recognising the limitations of these choices, Momentum Wealth has reimagined retirement income planning by enhancing the Retirement Income Option (RIO), our living annuity. Momentum Wealth introduced the Guaranteed Annuity Portfolio (GAP) as an investment component within its living annuity, giving people the option to blend the security of a guaranteed income from a life annuity with the flexibility of a living annuity. People, therefore, no longer have to choose between protection and growth. They can blend the 2-in-1 unique solution to meet their income needs when they retire and throughout their retirement years.

When you choose to allocate a portion of your client’s retirement money to the Guaranteed Annuity Portfolio as a component within the living annuity, that portion provides a guaranteed income for life. This adds an ‘asset class’ that delivers a guaranteed, reliable income stream, providing a safety net and ensuring essential expenses like groceries, medical bills, and rent are met regardless of market fluctuations, giving your clients the peace of mind needed for a fulfilling retirement. The remaining capital can then be utilised to generate income that caters for flexible expenses like vacations, hobbies, or travel, allowing for greater control over discretionary spending.

Tool to enhance your advice

Understanding the Guaranteed Annuity Portfolio’s potential is essential, but its successful application relies on a comprehensive financial planning approach tailored to individual needs. This is where your expertise as a financial adviser becomes critical. To help you personalise your financial advice when guiding clients on retirement income planning, we introduced the Income Illustrator. This tool helps financial advisers compare different income scenarios to guide the decision about how much to allocate to the Guaranteed Annuity Portfolio to suit a client’s unique income requirements and circumstances. The Income Illustrator gives financial advisers a powerful instrument to optimise people’s financial planning outcomes. They can use the tool’s scenario planning capability to explore tailored income scenarios, crucial for informed retirement planning decisions.

At Momentum Wealth, we believe in the value of financial advice. Taking your client’s specific circumstances, risk tolerance, and financial goals into consideration, you can use the Income Illustrator to illustrate the benefits of using the Guaranteed Annuity Portfolio together with the Retirement Income Option to help clients optimally manage retirement income. Momentum Wealth’s Guaranteed Annuity Portfolio, as a component within the Retirement Income Option, is a compelling option for people navigating the intricate landscape of retirement income. By blending the flexibility of a living annuity with the security of a guaranteed income from a life annuity, this innovative solution empowers you to offer your clients a financially stable and fulfilling retirement, underlining the importance of expert guidance in the planning process.

Jessica Pillay Momentum Financial Adviser
Jessica Pillay Momentum Financial Adviser

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