Building wealth and becoming financially secure are two things that parents need to teach their children. Having gone through many tough situations themselves, parents can make their children understand the importance of saving money.
Empower your children and explain to them at a young age how a bank savings account will benefit them in the future. Following are five tips that will help you teach your kids the importance of saving at an early age.
1. Start With a Money Box
The best way to start teaching children about savings is by giving them a money box. A money box is a term synonymous with savings. A money box helps the child to grasp the concept of saving, which is, if they save money, they will have it later on hand to buy anything.
2. Open a Bank Account
A savings account can be opened with a minimum invest of £1 to £1000 pounds. Many parents give their children monthly allowance. Instead of giving this monthly allowance in hand, parents can motivate their children to deposit it in a bank savings account. Explain to them the idea of compound interest that how putting their money in a savings account can increase their money.
3. Create a Timeline
Studies show that a one-hour financial lecture given to children wears off after four to five months. If you want a financial lesson to stick with your children, you need to educate them about it every month. The best time to impart this lecture is before you give them their monthly allowance.
Encourage them to keep a little book and mark their savings as well as spending. This will help them realize if they are spending their money on inconsequential things.
4. Ask Your Child to Think Long-Term
Tell your child to make a list and prioritize the items on it. Make them understand that how putting a portion of their allowance in their bank savings account will help them buy the items, which they have listed on the list. This will give them the drive to save more money to achieve their goals.
5. Give Them Life Lessons
It is considered taboo to discuss one’s financial situation. However, explaining your past financial mistakes to your children will give them a money lesson they will never forget. Tell them about the mistakes you did in spending money without thinking and later regretted your decision. Even though people learn from their own mistakes, you need to explain to your children how it is better to be safe than sorry.
Children start emulating their parents at an early stage. Teaching children about financial responsibility is an important step, which every parent should take. It is all about helping them build a future where they will be financially strong and will not have to depend on their parents or student loans.