Teaching your children a few basic money lessons can help them develop practices that last well into adulthood. Getting started is the key. As parents and family, there are a lot of different ways you can set your kids up for success. One of them is teaching them good money habits.
While schools are now starting to bring financial literacy into their curriculums, the basic and most important lessons often start at home. Sometimes, that involves children observing their family’s behaviour, other times it involves more active participation.
Here are a few ways you can give your kids a headstart.
1. Establish a rewards scheme
One of the most fundamental financial lessons is that money is earned. While we realise as adults there are caveats to that rule, it’s an important starting place with children. Once they realise they cannot get things they want for free, it encourages them to be more mindful with money they have.
To drive this lesson home, consider rewarding children for positive behaviours, like helping in the kitchen, cleaning their room, or removing the rubbish. If the rewards are small, they may pool the cash to buy something meaningful.
2. Incentivise putting money away
It can be hard for young children to see the benefit of saving for tomorrow overspending today. To make saving more appealing, you could offer them bonus money when they save a certain amount. For example, when they reach $10 saved, you offer an extra $5 for their efforts. It tells them more could be gained from storing money than from buying something immediately. It’s also an early introduction to compounding interest.
3. Let them help at the counter or checkout
To understand saving, kids may need to become familiar with the exchange of money. This can teach them that the things we buy aren’t free. One way to do this is to let children pay at the checkout with cash and receive the change. It may be even more impactful if it’s something they want to buy, like a favourite food item.
4. Set up a bank account
Several banks offer accounts for young children to help them kick-start their savings habits, check out the popular youth savings accounts here at Horizon. Setting one up could help the little ones see that money grows over time with regular investment. They’ll likely earn a bit of interest as time goes by, which may help teach them about the power of longer-term saving.
5. Introduce goals
For kids and adults alike, it’s hard to feel motivated about saving if you don’t have a target you’re working towards. Think about sitting down with the kids and asking them what they’d like to buy, then helping them work out what’s needed to get to that goal. The strategy will likely require you to check in with them about how it’s going so they don’t lose sight of their goal.
It’s important to understand that savings habits vary between adults and children. For children, implementing incentives, introducing savings goals, and setting up a bank account are all great ways to encourage them to develop healthy savings habits. It’s vital as parents to ensure our children are financially literate and provide them with the best chances to have a financially stable future.
By using the above tips and being actively involved in the process, parents can help instil a sense of financial responsibility in their children that will carry over into adulthood. And Horizon Bank is here to help! We offer a range of youth savings accounts to support your child’s savings goals. Get in touch with us today and learn more.