Teaching your child to save from a young age can set them up for a great financial future. Saving money is a difficult task to learn, some adults have yet to master it. This means that teaching your children how to save is of great importance. Here are some simple tips on how to teach your children how to save for their futures.
Needs vs Wants
To give your children a good understanding of the value of money and savings, you must discuss needs vs wants. Explain that needs are the basics, they include food, water, electricity and that wants are everything else such as a toy. A great idea is to show them your own budget so they can get a better understanding.
Tracking their spending
Children don’t usually realise where their money is going to. Making them keep track of their spending by writing it down each day can be quite shocking to them by the end of each week. This way they can see where their money is going and what they can do to cut down on cost and increase their savings.
Earning their own money
Giving your children the opportunity to earn their own money will teach them how to use it. This way they can learn that money is hard work and its true value. A great idea is to give them a certain amount for each chore they do in the house.
Children can find the concept of saving hard to grasp. Help them set goals so they know what they are saving for. For example, if they want to buy a R200 video game, they can save up their weekly chores money until they can afford to buy it themselves.
A good way to motivate your children to save is by giving them incentives. Offer to match the money they make as they save. Another good incentive is to offer a reward when they reach targets towards their goal. This will keep them motivated and on track to their savings goal.
Make money a daily discussion
If you want your children to learn about savings, you must teach them about money. Talk to them about the benefits of investing and show them your financial statement so they can further understand the concept.
Give them a place to save
If your children start saving towards a goal, they’ll need a place to put their money. For the younger children a piggy bank is an exciting place to store their cash. For the older kids opening a savings account with added interest will incentivise them as they see their money starts to grow.
These are some simple ways to change your child’s future and make sure they know how to handle their cash and start saving. You can set your child up with the skills they need and make sure they are prepared and steer them clear of financial difficulties.