As a parent, you only want the best for your children. This can mean setting aside some money for a rainy day, possibly setting up college funds and making sure all their immediate needs are met. 💷
But is that all they need for a secure future? In a world where everyone is flashing the latest gadgets and the fanciest cars, how can you educate your kids about the value of money?
Financial literacy is an important characteristic of intelligent, well-to-do adults. The rapidly changing world of finance can be extremely difficult to keep up in without a working knowledge of basic savings and investment. A good way to instill sound financial habits in your kids is by getting them to start saving at a young age. Young children can be more open to new ideas and are extremely eager to learn and experiment.
Here are a few activities that should pique your kids’ curiosity and help them learn the fundamentals of saving. 🔎
Having different money pots
Encourage your kids to store their money in different bank accounts, or even piggy banks or glass jars at home!. Each pot should be labelled how they want to use their money. 📥 For example:
Bank 1 labelled SPEND: This will be used to store the money the child uses for their smaller purchases.
Bank 2 labelled SAVE: This will store the money they are saving up for bigger expenses such as birthdays, new bicycles, etc.
Bank 3 labelled GROW: This jar will contain the money that they intend on saving for several years.
Bank 4 labelled GIFTS: This bank will hold the money that they should only use to buy gifts for or help friends and family.
Set savings goals
Work with your child to come up with a reasonable monthly savings goal. The goal should be based on their monthly/weekly allowance and the cost of the one primary item that they are currently saving for. Help them understand how much they need to save each month to afford that bicycle or expensive toy within the next six months. ✅ This will encourage the kids to find more ways to save in order to meet their goals faster. You can also set individual monthly goals on each of your kids’ different savings accounts or pots.
Offer savings incentives
One of the main reasons people commit to long-term savings options are the high-interest rates they offer. Offering an interest/incentive on your kids’ savings is a great idea because well, who doesn’t like free money! 📈 You can offer to add a stipulated amount or a percentage of your kids’ monthly savings to their banks. You can do this in a way that incentivises long-term savings (the grow jar) and helping others (the gifts jar).
Help them track their expenses
Imagine a kid trying to manage their expenses without tracking them...that’s why teaching them to track their budget while difficult is absolutely crucial. After all, don’t the most difficult things in life reap the largest rewards?
Ask your kids to keep track of their allowance and expenditure in a fun diary or notebook. 📓 You can then help them total and tally these records at the end of each month. Point out the expenses you think they can cut down on and how much they’ll save by doing so. Each kid is different, but you can decorate, give stickers, share fun incentives etc. to get them involved and excited. Money doesn’t have to be boring! 🥳
Set a good example
Kids often learn a lot by observing their parents. 💯
Sending them mixed signals about the way you handle your finances can make the concept even more confusing for them. Have honest conversations with them about why you are or aren’t getting them the expensive item they have been asking for. Explaining to your child why the toy isn’t a good purchase right now, or ever, will help rather than just saying no. Also teaching them about wills, life insurance, pensions, trusts etc. can be so beneficial!
At Bequest, we are committed to helping you take better care of your family. Our comprehensive life insurance policies ensure that your kids lead a financially secure life even after you. Please contact us on our website chat or at firstname.lastname@example.org. 👈