Every family is different. The amount of money we need to save depends on our family’s lifestyle preferences, income, and needs. As parents, we need to educate and empower our children and teach them to save from a young age. We should be a great model for them and learn the skill with them.
In this 3rd part of our 8 week financial literacy series, we share some ways to teach your children to save:
● Decide on a target savings goal together as a family.
It's not easy to save money. Between rent, food, and utilities, it can be hard to find time or motivation for anything else. But with a little planning, you and your children can set aside some of your income each month so that you'll be prepared for emergencies and have something left over at the end of the year. It’s important to start early. Involving children in saving as a family teaches them by example. As all parents know only too well, “they do what you do, not what you say”.
● Determine a timeline for tracking your savings journey.
As a parent, we know how quickly money can fly out the door. Between diapers and food for our little ones, it's hard to keep track of all those expenses. This is why we recommend that parents help their children to establish a timeline to track their savings and set themselves up with a goal or plan so they can save for things that they would otherwise not be able to afford. What works best is setting aside 5-10% of what they receive and make each month in order to start building towards their savings goals.
● Use “digital savings jars” to keep your savings.
This is one method that you may want to adopt in helping you save. Set aside a digital savings jars for your children’s savings to gain financial independence. Dedicate one for long-term plans like buying a PS5 or a school trip abroad that the child really wants to go to.. Have another jar for leisure activities, like saving for play-dates. The allocation of percentage of how much goes into each savings jar will depend on the allowances you give, gifts from relatives, earnings you give them for carrying out household chores and for achieving academically. This can be done digitally or physically.
As the world goes cashless, it is important to train your kids to learn to use “digital savings jars”.
● Teach your children and have a conversation with them about saving money.
Have a conversation with your kids about money and how they can become more financially independent. The most important thing you can do for your kids is to teach them the fundamentals of personal finance: managing their own money, understanding payment cards, and learning to save. It may seem difficult at first but it will pay off in the long run when they are able to be self-sufficient adults.
If you want to teach your children something new, start by talking about money with them! Talking openly about finances opens up an opportunity for dialogue between parents and children, which is crucial in shaping financial decisions later on in life.
Try this conversation with your child:
Ask them what they would love to have if they could afford it.
Convert that desire into a savings goal
Think of what responsibilities and accountabilities you want your children to learn in the next 3 months.
Convert these responsibilities into actions around the house and goals for school – and place small monetary rewards around these actions if they are achieved over the next 3 months.
As they successfully perform their actions, reward them, ensuring that they are saving as they do so.
Help them monitor how they are performing against their savings goal as they undertake their actions.
Sit back and watch them as they learn to earn and save.