How can I encourage my child to start saving?
As a parent you want to shelter your kids from the world of money in a bid to keep adult related concerns out of their lives for as long as possible – to let them have a childhood free of all the cares that come thick and fast once they find themselves in the adult world of work, pensions, bills and utilities.
The trouble is, too many kids find themselves thrust into that adult world without any prior experience of money. Everything is completely foreign to them and they struggle to adapt – often running into problems because they don’t know the real value of cash and they have no idea how to manage their own finances.
These days, it makes more sense for parents to be pragmatic when it comes to money and to get their kids familiar with it sooner.
Better the devil you know? If money’s a bit of a demon, then it’s surely better the devil you know. So how do you actually go about introducing your children to money? How do you encourage them to start saving up for the future?
Open an account
The first thing to do is to open a child savings account for them. Most children love copying adults and find it an absolute gas to get involved in the adult world, so this is a way of making finances fun instead of frightful.
The thing about child savings accounts is that they are designed to appeal to children and they don’t have to come with all the seriousness of full accounts. They just allow your kids to experience saving, familiarise themselves with money and learn to enjoy economising.
Deposit a little cash
The next thing to do is to put a little money into the account on your child’s behalf. This usually gives them a sense of pride that they’ve got a little something put away, no matter how small the sum. It also gives them an opportunity to learn about how interest builds up over time. Make a game of it – ask your child to keep an eye on their account and report back to you when their statement shows they’ve earned some interest.
A few lessons in value
A good way of helping your child to learn about the value of money is to show them how the money in their account relates to something they might want to save up for. Kids do take a certain amount of pride in buying things for themselves and any money that comes their way could easily make it into their savings. If they want a new toy, why not show them how much it costs and compare that with what’s in their account. Then show them how much closer they are getting as and when they make deposits. They’ll soon pick it up.
As time goes by…
Of course, as your kids get older they get more familiar with this sort of thing – they grow as their savings grow and they already have the right financial measures in place to deal with the challenges they may face.