Savvy kids save

By admin
16 March 2014

Learning to save gives kids financial self-confidence.

According to a US survey the average child sees 30 000 TV ads a year – which explains why they keep nagging you to buy them the latest cool gadgets even though your budget can’t afford them. By informing kids about the realities of money it can relieve the pressure on you while teaching them financial savvy and independence. Some experts say children can learn about money as soon as they can count and can understand financial responsibility from the age of 10.

Involve your kids in financial decisions

Don’t keep your finances a secret from your children. Hold regular family meetings to discuss money matters. Your kids don’t have to know exactly how much you earn but it’s important to explain how much money is spent on household expenses such as telephone accounts and school fees and why your budget doesn’t provide for all kinds of luxuries. Let your kids share in planning fun things everyone enjoys, such as saving for a swimming pool or holiday. Keep the meetings light-hearted and constructive or kids will begin to associate financial planning with stress.

Pocket money

Some parents see pocket money as a reward for good school marks or doing chores in and around the home. Others pay a fixed amount plus extra if the kids help out at home. The amount depends on the children’s’ ages and what they’re expected to buy with their pocket money. Experts agree kids should be taught the importance of budgeting and setting goals from an early age. For example a fixed amount can be put aside for a long-term goal (university fees) and a short-term goal (a skateboard).  Kids’ financial self-confidence is reinforced when they achieve their goals by saving for them. Another portion of your children’s pocket money can go towards a good cause – let them choose which charity they’d like to support. They can then spend the balance of their pocket money on whatever they like. Don’t try to interfere with their decisions. Let them make mistakes and learn to accept responsibility for them.

Bank accounts for beginners

Open a bank account for your kids as soon as possible. Take them along to the bank and explain how interest, banking fees, deposits and withdrawals work. Arrange for the statements to be sent to your kids and let them accept responsibility for their ATM cards if they’re old enough to have them.

Piggy banks for little tots

A jam jar or piggy bank for small change could be your toddler’s first introduction to the concept of saving. Let the kids decide what they’d like to do with the savings. Older children can discover how the interest accrued on savings accounts can make their money grow. But don’t stop there – also teach them about investments such as unit trusts and shares. Let them each choose a share. It could be a company in your area, such as a supermarket group, or encourage them to do some research by reading the financial section of the newspaper or listening to financial reports on the radio. Run a competition to see whose share does best over a specific period. It’s not necessary to buy the share; check the share’s progress on the internet or in the financial media.

Set an example

Don’t complain about how tight money is then use your credit card to splash out on a R700 pair of sandals when you’re feeling down. Teach your children to distinguish between wants and needs and make it clear they can’t always have what they want. Practise saving at home, for example by using water and power judiciously.

Find Love!