Every parent wants to see their children succeed financially. It takes the investment of time, not just money, to make this a possibility. From a young age, children start to pick up habits that could last them a lifetime. This is a parent’s perfect opportunity to teach about saving money. There are a variety of different accounts that are available for children.
While it is not always easy to admit, children are constantly watching and love to emulate their parents. From the very beginning, children need to see their parents saving money. While they are not going to be able to watch as an online transfer moves from one account to another, they will be able to appreciate change being placed in a jar or a family piggy bank. Mom and dad need to make a conscious effort to save in front of their children. Over time, it becomes something that seems natural.
Letting Them Try It Out
A piggy bank is the perfect starting point when it comes to teaching children how to save. This is a hands-on activity that kids actually participate in. Choose a fun container that will add a little fun to their bedroom and watch them start saving money. When they receive gifts, have them place part of it into the piggy bank and allow them to spend some of the money. They learn that at least a part of every amount of money they earn or receive as a gift should be saved.
Taking Savings to the Next Level
At some point, a child is ready to move their money from the piggy bank to an alternate location. When this happens, it is time to find a kid-friendly savings account. In the U.S., many banks offer special accounts that come with incentives for a child when they save. A parent’s name is always on the account and they determine when money is withdrawn. As a child grows, they can be given more freedom with the account. However, regular deposits into the savings account should be maintained.
In the UK, a Junior ISA is a savings account specifically designed for children. It grows over time and receives full access when the child comes of age. This money can be used for anything including education, the purchase of a vehicle or even a favorite video game. In each instance, a parent can point out that saving money was a great way to accumulate the necessary funds for important purchases. The funds consistently earn interest.
Giving Them Control
When children are younger, show them the account statements, so they actually see their money grow. Older children will be able to appreciate the growth of the account from one statement to another. At every turn, encourage them to save. Make it seem exciting and fun and something that will benefit them in the long run. At some point, allow an older child a limited amount of control. They will get a feel for what it is like to have money and the ability to continue to save or spend.
Written by a staff writer