Teaching your children to Save

It's never too early to start teaching your kids how to manage money. If you're wondering where to start, the best way to start is by example. Kids often listen, observe and adopt your behaviours and it is on these young and impressionable minds that money management habits are formed. If you want your child to learn to manage money effectively, it is important to nurture them so that they feel comfortable with budgets and saving. Here are some practical ideas you might want to try:-

When your children are between the ages of 4 and 5 and are confident with numbers, take them shopping with you. Give them some money to spend and make sure they stick within a set budget. This will help them have a real understanding or the value of money.

Once your children are comfortable understanding the value of money, give them a small amount of pocket money to manage. Start off with a daily money allowance and when they have a handle on this, try giving them their pocket money on their own.

When your children are learning to manage money, accept that they'll make some mistakes and from time to time end up with a budget shortfall. It is important not to supply your children with more money to compensate for this. If you reward a child for failure in managing their money they won't learn how to deal with the consequences or their mismanagement.

When your children have learned how to manage their pocket money, sit down and find out what their goals are. Goals create reasons to save. They will learn to understand the cost of purchasing things and have realistic saving time frames in achieving their goals.

A pro-active and fun way of teaching children how to manage their money is through revenue-generating opportunities. This could involve helping out around the house or helping out your neighbours with chores or odd jobs. Older children could take on more entrepreneurial enterprises, such as delivering pamphlets, washing cars or babysitting.

A great way to give your children incentive to save is to reward them for good saving patterns. One way of doing this is by depositing bonus money into their account as a reward for good saving habits and reaching their savings goals.

It is important to teach children how to spend, budget and save if you want them to create wealth in future. Take time in researching accounts for children and include them in the decision making process. By taking the time to teach your children the fundamentals of money management, you will be enabling them to feel comfortable with money, and ideally providing them with the confidence to make any money management choices that may move their way in the future.