It is really important that we help our children to have a good understanding about money. There are many advantages in life if we know how to handle our money well. Understanding about debt, budgeting and sensible spending will all come in time, but it is great to start with teaching children about saving money. As soon as they start being given money, perhaps pocket money for you, birthday and Christmas gifts or money from grandparents it is a great time to start talking about saving.
- Money box – it is a great idea to get the children a money box really quickly. It can be a lot of fun popping the money through the slot and rattling it to see how much is in there and then taking it out to count it. They can put in money they are given and maybe money that they find on the street as well. Even small amounts can be fun, particularly for younger children who think that the more coins they have, the more money they have regardless of value. Obviously as they get older school will teach them about coins and their values and you can do the same thing.
- Bank account – it can be wise to get them a bank account, particularly if they have a lot of money. The money will then start to earn interest which will make it worth more and it will be more secure. Children’s savings accounts tend to have good interest rates which are often higher than inflation. This is probably because banks want to encourage brand loyalty and if a child saves with them through their whole childhood, they may be more likely to bank with them as they get older. It is worth taking advantage of these rates but do compare and keep an eye on them as you may want to move the account if there is a bank with a much better interest rate.
- Spend and save – some children and parents think that it is better if the children spend some money and save some. Some might do it on a 50/50 basis where they ask their children to put half of all money they get in their money box or bank account and they can spend the rest. Teaching children about spending can be as important about learning about saving. They need to understand how much things cost. They need to experience running out of money and realising they cannot buy everything they need, so they can start to appreciate the importance of budgeting. It can also be good if they waste money by buying an item they then wish they had not bought. Doing this at such a young age will help them to be more selective in what they buy as they get older and could prevent them from making much more expensive mistakes then. Obviously it would also help if parents guided their spending, allowing them to make a few mistakes and then reminding them of those mistakes they have made in order to try to help them to avoid them in the future.
- Saving up – if children want to buy something that they cannot afford then teaching them about saving up is important. Learning that you cannot have everything when you want it is a good lesson to be learned and understanding that borrowing is not always a good option but waiting and saving can be. It can also be a good opportunity to discuss price comparisons and value for money and also to explain that it is okay to change their mind about what they are purchasing, because the during the time it takes them to save up they may change their minds. They should then make sure they abandon their original idea and move onto another or if they decide they want nothing then they have the benefit of lots of saved money that they can use when they do want to buy something.
Although this might sound like a lot of things, it does not take too long to implement each one. It can be fun talking about money with our children and although they get some finance education in school, it is important for parents to back this up. As they get older then you can start talking to them about your finances and how they differ form theirs. Discuss what sort of things you have to buy, how you budget and things like that so that they can learn from you. Hopefully they will learn from that and that will not encouraging them with their saving and budgeting but also help them when they have to run their own household. Hopefully just starting by teaching them about saving form a young age will allow then to grow up with an understanding of finance and its importance. It will allow you to have regular conversations with them about money and will hopefully allow them to get interested in money, how useful it can be and how to use it wisely to your advantage. Starting this at a young age when children will listen and take notice is well worth it as if you leave it until they are teenagers, you may find that they are less interested in listening to you and more interested in doing what their friends are doing which may not be the most sensible thing.