Encouraging Youngsters to Save
Britain is traditionally a nation of home owners and owning your own property is an aspiration shared by a large part of the population. However, one of the biggest challenges facing young people today is their ability to get onto the property ladder.
- Latest figures released by the Office of National Statistics (ONS) showed that almost 3.3 million people aged between 20 and 34 were still living with their parents
- Research by Halifax from earlier this year showed the average age of a first time buyer is now 31
- The Telegraph stated that children in the UK get on average £6.50 per week
It is important for parents to encourage their children to think about and discuss money; this will help them to understand the importance of saving. This is not only so that they can become homeowners of the future, but in order that they realise the importance of behaving responsibly with money and the value in working hard and earning in order to achieve future aspirations, whether it be going to university, buying a car, going on holiday etc.
Children can enjoy learning how to save money - the most important thing at the beginning is to make saving fun.
Here are a few ideas to teach your children to save money at any age
When it comes to learning concepts like saving, visuals and physical interaction are important, especially for young children.
Use Different Envelopes/Jars
You may be familiar with the envelope budgeting system for your own money, but this can also work for children. On either envelopes or jars have your child draw pictures of what he or she wants. You may also want to help your child understand that some items will take longer than others to save for.
For example, the short-term savings container might have a picture of a specific toy, while the long-term container might have a picture of a trip to Disneyland. Teach your child to set aside money for short-term and long-term goals, and have another container or envelope for spending on everyday items.
Make a Savings Goal Chart
Once you know what your child wants to save for, figure out how many weeks it will take and make a chart. You can represent each week with a box and your child can put a sticker in that box once the money from that week’s allowance is set aside.
Offer Rewards for Saving Money
Consider rewarding your child for saving his or her money. For example, if your child doesn’t spend any money for a certain amount of time, provide a small reward or treat. You can also make the prizes better the longer your child saves. Try stickers, an extra 1/2 hour of games, toys, or whatever motivates your child.
Set a Good Example
One of the best things you can do is let your child see that you save money too. Put money in a jar while your child is watching and tell him or her it’s your savings jar. This will show your child that saving is “normal.”
Match Your Child’s Contributions
A “savings match” can be a great way to encourage your child to save extra money. If you have a standard amount you have suggested to your child that they set aside from their allowance, if he or she chooses to save more, you could match it.
Helping Older Kids Practice Saving
As your child gets older, a goal chart may be less inspiring, and drawing pictures on an envelope tends to lose some of its charm. However, you can still set an example of saving and you can still match your child’s contributions. Plus, it’s always a good idea to have different envelopes, jars, or accounts for different purposes.
Open a Savings Account
When your child is old enough to understand the concept of interest, you can look for savings accounts that earn interest.
Help Your Child Prioritise
Have an older child write out a wish list of things he or she wants to spend money on and prioritise that list. Ask your child to think long-term as well, such as would they like a new laptop or a trip somewhere. Then, have your child allocate an amount of their allowance to each goal. These are the beginnings of a financial plan and this type of thinking will serve your child well in the long run.
There are a number of games available to teach financial concepts to children. Monopoly for example, can teach money management skills as well as the importance of planning ahead.
Talk About Money
While you may not want to discuss your salary in front of your children, you may want to let them hear you discuss your financial plan. This could simply be having a conversation with your spouse while your children are in the room. In this way, your children can understand that saving is a lifelong endeavour.
What are some of the most effective methods that you utilise to help teach your kids about saving money?