As parents, we understand the value of saving. We also know that the earlier we begin to stash money away, the better off we will be in the long run. Teaching children financial literacy concepts and encouraging them to save early is key. How, then, do we instill the savings habit in our children?
Determine: The first step is to determine savings goals. Have conversations with your child regarding setting financial goals, both long-term and more immediate. Attending university? Saving for a car? Looking forward to a school trip or a new gadget? Just talking about making plans will give them a sense of purpose.
Visualize: Once your child has established their savings goals, focus on one of them and figure out how they will chip away to meet their goal. How many weeks of saving a certain amount will be required to reach their goal?
Make a chart and mark their progress. As your child puts aside part of their allowance (or money from a Saturday job) in the bank every week, note it on the chart. This will let them see their progress as they work toward their goal. Even younger kids saving in their piggy bank can regularly count out their money and see their progress. Both of these tactics give children a physical understanding of the amount of money that they are saving. Visualising their progress makes it real for them.
Example: Parents can lead by example in a couple of different ways. First, discuss your own financial savings goals with your children. Bring it up naturally with them during conversation, and share your thoughts on saving for retirement or other financial goals you have committed to. This way, your children will learn that there is a bigger picture to saving and that it is a lifelong endeavour.
Another tactic is to let your child see you saving money. Tuck away your loose change in a jar while your child is watching and let them know that it’s your savings jar. This simple exercise shows how easy it is to save every day. Seeing is believing! If your children see you saving, it will naturally inspire them to save.
Prioritise: There will be choices that your child will need to make along the way. For example, if your child gets a monetary gift for Christmas, birthday, or a special milestone, it might be necessary to consider where that money will go. Will they spend some right away? Or save it all? Help them divide up the funds they are allocating and contribute towards each of their savings goals. The key is to involve them in the process and let them have a say in setting priorities.
Reward: You can consider rewarding your child for saving their money, such as when they’ve achieved a specific savings goal. Treat them to a movie, dinner out, or something else they would enjoy. You can even consider matching their savings. This will motivate them to keep the habit going.
We hope that these ideas will help you begin to inspire a spirit of saving in your children.
In sum, start slow, have fun with it, and the rest will fall into place!