Learning early in life how to manage money is a vital skill and in this new regular feature, Jill Smyth will be looking at ways to help parents make children realise that knowing how to manage money really matters.
A report by researchers at the University of Cambridge commissioned by the UK Money Advice Service revealed that kids’ money habit are formed by age seven and many experts believe that children as young as three-years-old can grasp financial concepts like saving and spending.
Money Goals: Spending V Saving
As adults and parents we are no strangers to setting ourselves savings goals, in fact our lives revolve around all sorts of goals and savings probably account for most of them, so introducing your child to the concept should be easy. This will help them to understand the importance of saving, help them appreciate the value of things and make them more financially aware in their future lives.
Here are a few creative ideas to help you do this and to make saving fun for your children.
Introduce your child to a Savings Goal Chart
Children always have a long wish list so why not sit them down and ask them to choose one thing that they would like to start saving for – start small so that they can see the benefits more quickly. Go online and check out the price of the item and then work out how many weeks it will take them to save up. Printing out a picture of the item will help your child to visualise their goal. Make a chart and represent each week with a box. Your child can put a sticker in that box once the money from that week’s allowance is set aside. They can then watch their money grow and their goal get closer.
Offer Rewards for saving money
Kids love rewards so consider rewarding your child for saving his or her money. If they save money with a bank they will get rewarded with interest, so why not introduce your own interest in the form of a small treat. If your child doesn’t spend any money for a certain amount of time, provide a reward like a packet of sweets or a small toy, this will help encourage them to get into the habit of saving.
Be a savings ‘Role Model’
Lead by example and show your children that you save money too. Buy a money box or a savings jar for yourself and one for your child and label them with your names. Show your child when you are putting money into it and encourage them to show you when they do the same. Just think your savings could benefit you into the bargain! You could also have a jar for charity donations too.
Match Your Child’s saving contributions
A “savings match” can be a great way to encourage your child to save money. It may sound like bribery but something as simple as giving them £1 for every £5 that they save won’t break the bank.
Open a savings account
Take your kids into town and visit a bank. Tell them how a bank works and bring home some leaflets on savings accounts. For older children allow them to visit some of the online comparison sites to check out what is available. Once they have saved up enough money, take them back into the bank to open an account. Make visiting your bank a regular monthly event so that they know they need to save up in order to top up their account.
Jill Smyth is Head of MoneySense at Ulster Bank. Check out moneysense.ulsterbank.co.uk for more useful hints, tips and practical exercises on budgeting, getting value for money and managing debt.
Image - © Etsy.com