Teaching your kids to save

Parents who want to see their children grow into financially responsible adults must start teaching the value of money early. One study published in 2010 found out that children are likely to carry over their traits to adulthood. If you want your children to grow into responsible adults who know how to save money for a rainy day, it’s best to train them while they’re young.

This is particularly important considering that not all adults have good financial habits. Here are a few ways to teach your children the value of saving and instill good financial practices.

Open a savings account

Many children may not understand the value of saving money because they either don’t keep track of expenses or aren’t a fan of delayed gratification. By opening their own savings account as early as possible, it can be easier for them to track their money and know how much they are saving through their spending habits.

With a savings account, your child can keep track of where all their allowances, savings, money gifts, and other sources of money go. And with your help, this can lead them to develop a habit of saving.

One of your options is the Fun Savers Club Account, available to children up to 17 years old. By the time your child turns 18, their account will be converted into a regular savings account to help them get a headstart into adulthood.

Provide savings incentives

Children are more likely to respond to positive reinforcement like incentives. By providing incentives, you are associating saving and delayed gratification with a rewarding feeling that could carry on as they grow older.

Give your child a lesson in interest and delayed gratification with strategies they can understand. One example is to give them a PHP100 bonus for every month they do not withdraw from their savings account. Or, if their monthly savings from their allowance reach a certain amount, you can reward them with extra money for their savings account.

Explore earning opportunities

Younger children may not completely understand where money comes from or how hard their parents work to earn it. Here’s a good way to help them understand the value of money.

On top of their regular allowance, give your child the opportunity to earn additional money through chores. This will help them realize at an early age that money does not just sprout on trees. The money they earn can be used to spend on their wants, so if they want to buy something expensive, they have to learn how to save.

Letting them learn from their own mistakes

Your children may still be prone to make financial mistakes, like spending all their allowance before their next one is due, or experiencing buyer’s remorse after buying an expensive toy. While it’s not ideal, it is better for your children to make mistakes now and learn from them rather than commit these mistakes later on.

It’s important that your children understand the consequences of their actions. For instance, if they spend all their savings on a new video game console, make them realize that they can’t splurge on other wants, like ice cream or going out with friends. This can help them understand that they need to weigh their spending and see if leaving no savings for themselves is worth the cost.

As you prepare for your children’s future, don’t forget to look into their spending habits to gain an insight on how they might spend their money later in life. It is best to train your children to become financially responsible during their formative years so that they bring these practices to adulthood.