Knowing where to start to pass good savings habits to your children isn’t always as clear as teaching them how to walk, or teaching the benefits of choosing an apple over a cookie for a morning snack.
However, there are some easy ways that you can help them on their way to a bright financial future.
Money Box or Bank Account?
Younger children tend to like storing their money somewhere they can tangibly see and feel it growing, like a money box or a wallet/purse. There are so many great moneyboxes to choose from but you could start as simply [and cheaply] as using an empty jam jar that your child has decorated themselves. Of course an appropriately themed money box may be what your little one needs to motivate them. If you are tired of contributing to the wealth of Disney Inc. then buy them a Tardis shaped money box and schedule a deposit into space every Sunday night at 7:30pm. The more fun you make depositing money, the more buy-in [pun intended] you’re going to get!
For older children, a bank account may be more appropriate. Gone are the days of car trips to the bank and hand-written passbooks. Online banking accounts make tracking your children’s savings easy and readily accessible, and let’s face it, they could probably teach us a thing or two when it comes to new technology! Each child is going to have their own preference and there is no right or wrong. Whether it’s a gold coin donation in the slot or a number on a screen, it is important that children have a way of tracking their savings and get into the habit early.
Satisfaction and Achievement Through Earning Money
Without some guidance, most children don’t learn the value of money until they leave home and realise that the “Food Fairy” doesn’t exist and no amount of wishing they would is going to mysteriously start putting food on the table.
There are lots of different approaches you can take which will demonstrate the value of money, such as:
- Giving your children regular tasks with monetary rewards;
- Allowing them to take their earnings to the shop and purchase the reward themselves;
- Setting goals to save towards i.e. earning and saving money to buy a new toy or to go to the movies;
- Encouraging them to talk about how they are progressing toward their goal.
Fostering a sense of achievement as they begin to grow their savings enhances children’s positive attitudes towards money. It’s a great foundation for when they start to earn a regular income through a part-time job or enter into the workforce.
You may consider depositing a small amount regularly into their account to get them started so your kids can see their savings grow.
Money earned from chores is a great way parents can help their children make regular deposits and some parents may choose to co-contribute as a way to encourage them further.
TIP: This is what is commonly referred to as a win/win/win parenting tool. Kids learn the valuable lesson of saving, money accumulates for their future AND someone else is cleaning the bathroom.
Putting away a portion of their earnings from part-time work is another fantastic habit to develop in your children. By leaving a portion for spending on “appropriate” expenses whilst the “untouchable” savings account continues to grow, those really big purchases such as their first car or the ridiculously priced formal dress that daughters have a tendency to request can be funded (at least partially) by the kids themselves.
Being a Good Role Model
As much as you may resist reading this section, it is important! When you are setting your own goals and achieving them, your children see that saving and managing money does not have to be confusing or difficult. If you are kicking money goals, it encourages them more and gives the whole family a positive mindset surrounding money.
Why not create a vacation mood board to show your children that you are working towards that family holiday? Share brochures with them and be open about the financial choices and sacrifices you make in the lead-up. You never know, they may surprise you and offer to shout the ice creams at MovieWorld!
Building healthy money habits doesn’t have to be complicated or a chore.
In a few simple steps, your children can learn the value of money and more importantly, the sense of achievement that comes with sensibly managing finances. We don’t want to create a world of little Scrooges, but it is nice to know your children are taking their first steps on a positive money training track with a slow and steady build-up to the marathon of lifelong money management.