As the saying goes, good saving habits start young.
Teaching children to save is a skill that can benefit them throughout their lives. It’s never too late to teach them how to save money. After all, it's their character that needs time to develop.
If you wait too long to start helping them with their finances, you may find it difficult to erase bad spending habits they may have picked up. If you teach children to save from a young age, they will be able to handle their finances responsibly and reliably as adults, and they will have a nest egg large enough to see them through tough times.
Among the many things we may pass on to the next generation is financial literacy. First, we can teach our children the value of saving for the future by instilling them in the habit of saving.
Here are some ways we may teach our kid how to save money:
1. Break down the gap between necessities and wants.
Make a table with two columns: one for necessities, and another for wants. Food, clothing, shelter, medical care, and education are all examples of necessities/needs. Wants include cell phones, other electronics, pricey toys, designer clothes and accessories.
Teach your kids to put their needs first and their wants second when it comes to spending, and only buy what they want if they can afford it. One of the most important lessons you can teach kids about money is to always ask themselves if they need anything before buying it.
2. Provide a reasonable allowance for them.
Allow them to have some pocket money or an allowance per week. Don't make it too much, though. In this way, they will gain experience with personal finance management and develop an understanding of the importance of both saving and spending sensibly.
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3. Assist them in establishing their goals.
Tell your kids that they will have to put away some of their allowance money if they want to buy something special for themselves. Assist them in setting achievable savings goals, such as how much they can put away weekly and for how long.
In this way, they'll learn the importance of saving up for big-ticket items and experience the joy of rewarding themselves with those funds.
4. Allow them to earn their own money.
They receive a weekly allowance from you. This will provide them with "income" that may be used in many ways. Why not give them a chance to work for some additional cash? Like, maybe, helping out around the house more in exchange for money? This will teach them that hard work is necessary for earning extra money.
5. Put your own advice into practice.
Children have excellent eyesight and tend to believe everything they see. They will be more likely to follow your advice to save if they perceive that you, too, are making sacrifices and forgoing indulgences.
6. Set up a bank account for your kids.
Get them to open a savings account so they can earn interest on their savings. There are a variety of kid-friendly bank savings accounts available, including POSB's My Account, OCBC's Mighty Savers Account, UOB's Junior Savers Account, and others. The minimum deposit to start one of these savings accounts is relatively low, if not zero. Here's a table we put together for various savings accounts:
Teach Them Young
Instilling in your children the values of saving and fiscal responsibility will pay dividends for a lifetime. In time, they will develop character traits such as self-control, focus, initiative, and goal-setting. With these moral pillars solid, kids will be prepared to take on the world and achieve lasting success, including material prosperity.
