Educating, motivating, and empowering children to become regular savers will enable them to keep more of the money they earn and do more with the money they spend.
As a parent, you take the time to teach your child valuable life skills such as why it is so important to do the best that they can at any task they undertake. Similarly, you play a crucial role in teaching your child about money. They should be able to understand the basic concepts of saving at a young age to ensure they can easily adapt to learning money management skills as they reach adulthood. Many parents feel that it is not necessary to educate their children about money at an early age and feel that it is a topic that should be addressed once their children reach adulthood. This can prove to be detrimental to the future financial health of your child.
Recent studies have shown that school-age children are most likely to benefit from learning about the value of money, how to spend wisely and the importance of developing saving habits. By teaching your children about money when they are young, they are more likely to be competent at managing money as they develop into adults.
As soon as your child is able to count, you should introduce them to the concept of money. Take an active role in providing them with guidance and information. Constantly observing them and repeating counting methods are the two most effective ways to teach a child. Help your child learn the differences between needs and wants. This will prepare them for making good spending decisions in the future.
Setting goals is fundamental to learning the value of money and saving. Nearly every toy or item children ask their parents to buy them can become the object of a goal-setting session. This can be best taught through the use of a savings-jar or the traditional piggy bank. Make your child’s goal-setting exercise fun by decorating the savings jar with pictures of the item that they may want to save for. Such goal-setting helps children learn to become responsible.
Introduce your child to the concept of saving versus spending. Explain and demonstrate the concept of earning interest on savings. This concept may be harder to explain to a younger child. The use of an alternative method such as Incentive Saving can be used. The best way to practise this is by giving your child R1 each day for a week. Then explain to them that if they save it each day in their savings jar that they will be rewarded with an extra R1 at the end of the week. As they become adults, they will soon realise that the quickest way to a good credit rating is a history of regular saving.
As your child develops the skill of money management, it is always a great idea to take them to a bank to open their own savings accounts. It is important to encourage your child to make their own spending and saving decisions. You should not discourage them when they want to withdraw money for a purchase. You may also discuss how it is always important to do research before making a purchase decision. When a child makes their own decision to purchase an item and pays for it with the money they have saved, they feel a sense of accomplishment and this will inspire them to save more.
Teaching your child how to save is an important step to prepare them for financial responsibility and a secure future. You should give your child the best start to a prosperous financial future by teaching them how to save at a young age.