Help get your children/grandchildren into a savings habit
11th April 2019
Help get your
children/grandchildren into a savings habit
It’s a real challenge to get your children or even your
grandchildren interested in the concept of saving. We know that the earlier you
start saving, the better prepared you will be for the future. Talking with
children or grandchildren however, about anything other than the next 24 hours
doesn’t capture their fertile imaginations and the future is of little interest
So how do get them into the savings habit? Here’s a few top tips.
- Talk with your children about money from an as
early an age as suitable. It shouldn’t
be a taboo subject and the days of discussing money as “vulgar” are well and
truly gone. Indeed, there is currently a Lloyds TV ad running on the need for
families to discuss money.
- Discuss the difference between “wants” and
“needs”. This is a challenge in today’s world of instant gratification made
possible by our digital environment. The concept of anticipation is an alien
one to millennials and beyond but it’s important to make the distinction about
what is necessary compared to what is desirable. Instilling that concept from
an early age will go a long way to making informed decisions in the future.
- Let children earn their own money. Even if it’s
just pocket money, make sure that they do something like a simple chore in
order to receive it. As they get older encourage them to take a part-time job
to help them understand the importance of earning their own money. This also
gives them an early and useful perspective on the cost of living.
- Help them set some savings goals. Start by
identifying something that they might want to buy e.g. a game, sports kit,
clothes etc. They need to be able to calculate how much they can save and how
long it will take them to have enough to buy the item they want. This is
important to develop the concept of money that is put aside over and above
their usual spending habit as well as planning. It will allow them to prioritise
how they spend their money.
The next step is to encourage them to save on a regular basis even when they
don’t have a specific project or item in mind. This is the start of getting
them into a savings habit.
- They’ll need somewhere to store their savings
beyond the piggy bank as they get older. There are some restrictions on people
under the age of 18 when opening accounts, but most banks have options such as a
parent being a named as a joint account holder. There are of course emerging
online alternatives such as gohenry.com which also promotes education about
money to children.
Whichever you choose, it exposes children to the institutions that underpin
money and some of the ways that they can start to save.
- Once they have their account set up, encourage
them to track their money. With nearly all banks being online, then this is a
much simpler task. Indeed, many banks now alert you of your spending as it
happens. Keeping track of money whether its spending or saving it will help
with financial planning in the future.
All the above is just common sense but it should be an
important part of children’s education to help safeguard their future.