|
Teaching Your Kids How To Save Money
|
|
No matter how old you are, it pays to be
financially savvy. Children are curious about money and through observation and
repetition, can be taught about it as soon as they can count. Educating,
motivating and empowering children to become regular savers and investors will
ultimately encourage them towards financial independence and smart financial
decisions later on in life. To help you educate your kids about personal
finance, here are 13 money management tips. |
Talk to your kids about your values concerning
money
Teach them how to save it, how to grow it, how to spend it wisely and how to
avoid the temptations of credit cards or excessive, thoughtless spending.
Help your kids learn the differences between needs, wants and wishes
This will hopefully prepare them for making good spending decisions later in
life. You can help them by differentiating between things that they need (new
shoes for example), that they want (a new music CD) and things they wish for and
would need to save for (a new bicycle or cell phone).
Teach them about setting goals
Whether it's saving to go to the movies once a week or saving up for an iPod,
goals will help your kids learn about the value of money and how to become
responsible for it themselves.
Introduce your kids to the value of saving versus spending
To demonstrate the concept of earning interest on income, you could consider
paying "interest" on the money your kids save at home. This will foster a
continuance of a savings plan later on in life.
Receiving an allowance will give your kids a sense of independence and spending
power. However, simply handing over the cash each week is not going to teach
them about the value of money.
Give pocket money in denominations that encourage saving
If they receive $4 a week, give them four ones and encourage them to set aside
at least $2 towards their savings plan.
Take your kids to the bank to open their own bank savings account
Encouraging regular saving habits early is one of the keys to saving success.
Just remember that you'll generally need to accompany them to open their bank
savings account if they're under 18 years old.
Allow them to make spending decisions
Refusing to let your kids withdraw and spend their own money could discourage
them from saving. Rather encourage them to do research before making major
purchases and wait for the right time to buy (like the end of season sales).
Have a discussion about the pros and cons of saving or spending their
hard-earned money before leaving for the shops.
Keep records of money saved, invested or spent
To encourage an element of financial control use 12 small envelopes - one for
each month of the year - and encourage your kids to place receipts for all
purchases in the envelopes. This could be useful when explaining the concept of
budgeting as they will be able to see regular and ad hoc expenses throughout the
year.
Teach your kids the value of money when shopping
Going to the supermarket is often a child's first spending experience and the
outing can be used to demonstrate planning and budgeting. By writing a list of
the week's shopping you can teach them to avoid impulse buying, and by making
price comparisons, you show them how to check for value and quality.
First-time investors
To help demonstrate the workings of the stock market, you can allocate a few of
the shares you own to your kids and follow the company's market activity
together. This exercise would work best with brands that children can relate to
like their local supermarket chain, mobile service provider or favorite clothing
brand. As they get older, you could help your kids choose some shares to buy
with their own money.
Explain the dangers of borrowing and paying interest
Charging interest on small loans you make to your
kids will help to illustrate the concept of interest.
Demonstrate being aware of spending
When using your debit or credit card at the supermarket or a restaurant, show
them how to verify the charges and how to calculate a tip.
Encourage regular family financial discussions
Whether this is a time for younger children to tally up their savings or for a
discussion with your teenager about developments in the national and global
economies, improving their understanding of finance will be useful in becoming
more confident with money and ultimately, establishing their financial
independence.
by Ehud Furman
Capitec Bank
*
See our
Savings Charts For Kids!
Search the web for more parenting information!
|