You and Your Money
Educate Children About Saving as Early as Possible
he most absorbing thing is the ‘‘here and now’’ when a new child joins the family - it’‘s hardly a surprise when children are so full of energy and life. You’‘re likely to spend the first few years spending most of your time protecting your child and making sure they are safe and well provided for. However, one of the greatest gifts you can give your children is the ability for them to be able to provide for themselves in the future. This is why it’‘s a great idea to help get your child into the habit of saving as early as possible.
If you educate your child about saving when they are young, you’‘ll have the chance to help them build a habit - and an incentive to save - that could last a lifetime. What can offer a parent greater peace of mind than knowing that their child has self sufficient understanding and motivation to look after their finances no matter what happens?
One way to start teaching your child about the value of money early on is to turn it into a game. Buy some toy money and set up a “shop” in the house. As long as you keep your prices consistent on a day to day basis, you’‘ll be providing your child with an understanding of how money is used and the kind of things it is used for. When they become a little older, the time will come to consider pocket money. Start off with very small amounts of money and don’‘t despair when it is quickly spent on sweets or treats - young children tend to find it difficult to plan for the future so they are likely to be more concerned with immediate gratification.
However, this stage doesn’‘t have to last forever. As your child’‘s tastes become more expensive, you’‘ll probably need to increase their pocket money. When you do this, make sure you also drop the amount of money you spend on their favourite toys accordingly. This means that they will have to hang on to their pocket money if they want the latest toy. By doing this, you’‘ll teach them the benefits of saving in a way they understand. Some parents find this hard, so a nice compromise is to tell your children that when they have saved up for half the cost of the toy, you will pay the other half.
Additionally, it can be a great idea to encourage children to help around the house by paying them for their time and effort when they take on extra chores. This is another excellent way for children to understand the way money works. Parents keen to get their kids off on the right foot are also likely to look into saving options such as Child Trust Fund savings account and accounts for young savers.
Teaching children about money from an early age helps prepare them for later life as their confidence grows in knowing about transactions and savings. As a parent, setting them off in life with a positive first few steps will give you a sense of satisfaction and your child a huge debt of gratitude for your efforts.