Today’s post is all about ways to teach your children the value of money and how to save. We all kind of know that this is important. But, until recently I did not really realise just how important it actually is.
A 2018 study carried out by a group of psychologists from Purdue University, Indiana, caught my eye. They discovered that children develop the spending and saving habits they take through life by the age of 7. So, it is never too early to encourage good financial habits in your children. Here are some ways you can do that.
Open a savings account for them
Opening a junior investment ISA for each of your children enables you to save for their future. It is also an effective way to teach them the value of saving. Provided you stay within the savings limit allowed all of the interest earned is free of tax.
You can also now open stocks & shares ISA for the under 18s. This way of saving works well for most families. However, before you open one you need to double check that this is the case for you. You can find plenty of free advice online by going to the main consumer and money advice websites.
Get them to save their change
The good thing about ISAs is that the case cannot be withdrawn until the child is 18. So, they are a great way to save for life events like going to university or buying their first car.
Get them a piggy bank
If you do not have the cash to open a savings account, do not worry. There are other ways to give your child the saving bug. For example, buy them a change jar or piggy bank each. They will soon learn how small positive actions add up to big rewards.
Involve them in taking care of the family finances
Showing your children how you balance the family finances is worthwhile considering. I appreciate that not everyone will want to do this especially if money is very tight. After all, you do not want your child to start to worry about where the next meal is coming from. But, done in the right way it can teach your children vital life skills.
Teach them not to be wasteful
One option is to sit down with your kids and use comparison sites to find a cheaper electricity provider. Or, get them to make a list of habits the family can change to reduce its power consumption. Buying a smart live electricity monitor and getting the kids to use it is a great way of helping them to learn not to be wasteful.
If you wanted to you could re-channel the money you save into paying for a family day out. This is an effective way of teaching your children that saving money brings rewards.
Install a budgeting app on their phone
If they have a Smartphone, get them to install and use a simple budgeting app from an early age. This habit of tracking what they spend in live time will be invaluable for them. You may want to reward and reinforce this habit, by giving them extra pocket money.
Set a good example
By far, the most important thing you can do is to set a good example. If you develop and use good money management skills, the chances are your kids will too.
This is a collaborative post.