Teaching kids how to make every coin count should be every parent’s responsibility. However, saving money can be a habit that can take time to build, where even adults find it hard to master. As saving money acts as one of the essential aspects of having a secure financial foundation, passing on valuable money-saving techniques and advice to our kids becomes indispensable.
Here are 10 important fiscal hygiene tips to share with your kids, which will ultimately make you more confident too, when the time comes for them to leave the nest.
1Open an Account
Banks offer a variety of accounts. Among them are also children’s savings accounts such as Junior Individual Savings Accounts (JISAs.) Start by introducing your kid to one early on – most banks let children open savings accounts from age 7. Current accounts usually become available to kids around the age of 11. Encourage your child to become both interested in money-saving habits and disciplined about it. It will certainly have impact on their future and how they learn to meet their goals.
Furthermore, you can educate your children about the fundamentals of responsible credit use as a way of boosting their credit score. For example, most schools do not teach children on money saving. Thus, it is up to parents to help their kids start a saving account and teach them how to build a good credit to it.
2Make a Home-made Drawer
When it comes to money, this is how it all starts for a child – relying on gifts from parents, family relatives, and friends. Teach them how to reverse this from spending to saving, no matter how much your kid gets. The easiest way is to allocate a home-made drawer to a cause your little one is passionate about. For instance, if your kid wants a specific shoe fashion, let them put whatever they receive in the drawer until the targeted time to buy the shoe. Discuss with them the importance of waiting and bring their attention and focus back to the drawer repeatedly.
Also, discuss the details of the purchase with your child, i.e. how much the targeted item is, the much saved, and the remaining amount to purchase the product etc. When they reach their target, they will get motivated to keep more even in the future. It may even make them more considerate in other areas of life too!
3Set Attainable Goals
In order to keep your child motivated, it’s very important to set a specific goal. It could be something small at first, so they can still feel some sense of special responsibility. For instance, start with something like a dress or an iPod. Inform yourselves about the precise amount and draft a plan together that involves a few simple steps your little one can keep track of. For them, it will be a valuable lesson in determination and execution. Don’t forget to celebrate together after the acquisition! It is even more important to keep things fun and simple when it comes to cultivating serious money mindfulness habits!
4Make Saving Money as a Rule
Saving money, as a rule, may sound hard for every child, though, in the end, they will be also able to see the reward in it. It doesn’t matter how much they get, either $5 or $10, restrict it to be a no touch saving. For instance, if your kid receives $3 from his or her relative, ensure they save the whole amount.
5Teach Your Child How to Budget
Often, it may be tough to convince your kids to budget their money for a particular event or item when instant gratification seems much more rewarding. Children have a short attention span and the younger they are, the more they relate only to ‘here and now’. Be patient, communicate with them and use easy examples from their known environment to help them understand what you mean. Break down the essentials of budgeting in easy concepts and steps, and help them create their own budget. Also, help them see – through your daily spending – that the money allocated is directly purposed to the desired and budgeted items.
Very importantly, we all know that volatile purchases are the archenemy of saving. If your child sees you making a lot of impulse purchases, do not expect anything different from them.
6Working for Payment
You could offer your child to do some extra home chores beyond their assigned household duties as a means of earning money. The payment will certainly boost their saving behavior.
7Encourage Your Child to Invest
Wondering how a child can be an investor? Never mind. You can help them come up with ideas on how to invest, e.g. investing some of the birthday money from aunty Margaret into a small-scale sustainable activity, such as selling home-made pastries around the neighborhood. The possibilities nowadays are countless, i.e. a lemonade stand, various arts and crafts like jewelry or handmade birdboxes, bookmarks, slime etc. They will learn that investing even minimal amounts can reap greater rewards, but they will also become aware of risks and costs.
8Sell Personal Items No Longer of Use
Advise your children to sell some of their stuff for a top dollar. These items may include old shoes, clothes, toys, old phones, and other luxury items. Always ensure to permit your child when making these selling deals to avoid selling the crucial items for money. These days, selling items is even easier with the great multitude of online stores and marketplaces, like Amazon and eBay.
9Make Financial Decisions
Help your kids dream big, but help them with being very practical about the execution also. Bring your kids along when shopping and explain your motivation behind the more significant purchases. For example, when you visit a nearby designer for a wedding fitting suit, your child may prefer a tuxedo instead of going for a cheaper option. Use this as an opportunity to explain to him why you prefer the cheaper one and teach him the difference between a need and a want. By deciding on the more affordable suit, the kid will have a clear view on how substantial the saving is.
10Separate Spending From Savings
Teach your little ones how to handle temptation. New gadgets, cooler toys and fancier clothing fill up store shelves every other Tuesday. Remind them that their savings are more important as they can get used for emergencies rather than for any other purchases. Teach them how to separate their spending by coming up with two savings accounts: one for spending and the other for savings. If you yourself are not too sure about the details, the reports will enable you to stick to their assigned purposes.
Finally, we hope that this money-saving advice for kids leaves no stone unturned. In the end, it is up to us to help our children kick off financial literacy in the world.