If children are taught to save money from an early age, they will benefit from such an important lesson throughout their lives. Children need to understand that they cannot always have everything they want as it costs money. It is vital that children learn to put money aside for the future.
* Explaining *
Teaching young children how to save money can be difficult as children have no concept of time or how much items cost. However, with a little time and lots of patience, a parent can break down the reasons why to save money and demonstrate how to do so by setting an example. A parent can start off by explaining that they go to work to earn money and this money to broken down into making a home, paying the bills and any remaining money goes towards having nice things like holidays or a new bicycle. If a parent breaks the whole concept into smaller and more relevant pieces, children will find it easier to understand. It is important to carefully explain money has to be saved over a period of time and a new bike cannot be purchased immediately, to install the concept of saving money into a child.
* Encouragement *
To help a child understand about money, it is a good idea to place smaller descending coins like one cent or a five pence coin in a jar and keeping adding it to over a period of time. A child can then visually watch it grow and the understanding of saving or ‘collecting’ money will be mentally noted. Each time a coin is added, the parent can verbally say how much has been added. By using the different senses of the child, a parent can easily reinforce the importance of saving money. When the jar is full, involve the child by asking him or her to separate the coins into different sizes or counting the coins. Once the task is completed the child could be given the money as their ‘reward’ for helping out. Encourage the child to hide the money in their bedroom. If a game is made out of the situation, children will enjoy it more. The child could pretend that they are a squirrel and instead of hiding nuts away for the winter, the child is ‘hiding’ money away for the future. Remember, out of sight, out of mind and more money saved!
* Stimulate your child’s interest *
Stimulate your child’s interest by purchasing or making a money box or ‘piggy bank’, where the child can keep their own money. A money box could be made from papier-mâché or a plain one which needs further decorating can be purchased from a craft shop. Alternatively a ready-made money box could be given as a gift. The more involved the child is, the more interested the child will be. The child will feel more independent and responsible if they are given an attractive container where they can look after their money.
* Give pocket money *
Parents often encourage their children to help around the house with daily chores by giving small amounts of money, often referred to as ‘pocket money’. Install in the child’s head that he or she has ‘worked’ hard for this money and therefore it should be placed in the special money box.
* Sweets *
Children love eating sweets but spending cash on sweets is purely wasting money and does nothing but rot your child’s teeth. Explain the damage that sweets can do to your child’s teeth and parents should urge their child to set this money aside to buy something else instead. Encourage children not to spend their money and suggest they could put it towards a much bigger item like a car, when they are older.
* Set an example *
Children watch and learn from their role models and if they see their parents putting coins away in a jar and taking the money to the bank, they will have a good example to follow. However, if a child sees mom or dad go out to the store every day and then watches them return home with sweets and unnecessary items, the child will only grow up thinking this is the normal practice. Spend, spend, spend… and not save, save, save.
* Take your child to the bank *
Whenever you have some spare money or when perhaps you have received a cheque in lieu of a birthday gift, take your child with you when you pay this money into the bank. Show them how easy it is to pay money into a bank and make it a pleasant experience. If your child asks to pay in some of their own money next time, strike while the iron is hot and give your child this new opportunity.
* Birthday or Christmas money *
Relatives often give children money for birthdays or instead of a Christmas gift, particularly if the relative does not know what the child would like to receive. Encourage your child to save the money so they can buy something that they would really like in the future. Alternatively suggest to the child to place half of the money in the ‘piggy bank’ and treat themselves to a gift with the other half. If the child is allowed to spend some of the gift money, then they will not be disappointed that they have not had a gift from Aunty Ethel. However, the more important part is that the child has saved half of the money.
* The value of money *
It is important to install the value of money into children and explain once the money has all been spent, it has gone. There is no more.
* Long term planning *
Children often dream about the future and what car or house they would like to have. These dreams can be used as a stimulus by telling your child that they could have the perfect house or the red car, if they start saving all of their money now. Child can then use this as goal to work towards.
Children need gentle encouragement and simple explanations from their parents to help them understand money and by saving money; they can better themselves in the future.