Showing posts with label pocket money. Show all posts
Showing posts with label pocket money. Show all posts

How to teach & help your kids save money

Sunday, December 1, 2019

Teaching children about saving money

When I was a kid my Dad would put all his spare coins into a giant tin money box.

To us as kids it, it seemed massive - it was probably about 4 litres in size. He'd fill that tin with all his silver. It took him at least I year I imagine.

When it was full, he'd open it up with a tin opener and us kids would get to count it up.

If we were lucky, we'd get to put a few coins in our own money boxes too - the banks used to hand them out like candy - we definitely had the classic piggy bank but I also remember a rugby ball shaped one and a house.

Anyways, that's probably how I learned about saving as a kid.

Times have changed in many ways we are a cashless society. I can pay for my groceries with my cell phone now!

So, responsible parents, you're here to learn of the ways you can help teach your kids how to save money.

If your child understands money, chances are they know about saving. But do they know why?

The first step is to teach your child why they should save money.  The age group we are covering here is around the 4 - 6 year old mark.

Do they have a specific goal in mind?

Do they want a new skateboard, or Frozen doll?

Or do they need to learn about rainy days?

So, step one. Just like my dad did in my family - start with a piggy bank.

It's easy to save money and they will be able to visibly see how that money grows over time.

You can take this opportunity to create a timeline that your child can follow. If they are saving their 5 dollars a week pocket money to buy a $50 item, you can plot out 10 weeks of savings - teaching them how savings add up by crossing off goals (such as quarter, half and three-quarters of the way there) will help them learn that savings is a time progression.

The next step works if the above has been a success.

The next step you can do is to open a bank account WITH your child. Don't just open one for them. Make the opening of the account part of the experience?

Have your child count the money and be the one to hand it over to the bank teller.

Most modern banks have accounts tailored for child use, such as accounts that do not have a debit card.

You can also connect them to your online banking so you can help keep tabs and transfer money over and the like.

For this way to save money to work, your child now needs to be invested in the concept. They have to want to physically hand over the money. So, it's up to you as a parent to teach them how banks work. Explain to them it will always be their money and the bank is simply looking after it.

Explain to them they will always be able to get the money out. And no, the bank cannot give it way.

This is perhaps even a chance to explain how interest works...

It's not just about helping kids learn to save by getting them in the habit. It's also about helping them realize opportunities to earn money.

For example, on what basis do they get pocket money? Do they have to do chores and jobs around the house?

Have a discussion with your child about how other people earn and use money.

  • What's the difference between a wage and a salary?  
  • How do retired people get money? 
  • Why do banks lend money?

It's really important that if you have money stresses in your life, that you do not transpose these to your child. Don't make them feel that they have any ownership of a lack of money in the family home. It's an unfair burden on a young child. While you are possibly doing this unconsciously, being mindful of such matters will make for a healthier money mindset.

A classic example I once heard was the story of a young girl who broke her glasses and was terrified to tell her dad because she knew how much they cost and was worried more about her Dad's reaction than getting new glasses. 

Kids will learn this stuff over time, no need to put pressure on them. 
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