Giving children money from a young age can sound risky, especially if you’re concerned about over-consumption of junk food. Actually, starting early can make a world of difference when it comes to teaching children about investment and fiscal responsibility. Your child would likely grow up with sound financial decision-making skills that would be critical for budget-management later in life.
- Start a conversation on money, savings and investments.
Every advice we have seen out there has emphasised on the need to talk to children about money. It may be useful therefore for you to start this discussion before you hand out real money. You can explain to them what you use money for. As a bonus, it can help to pacify temper tantrums in supermarkets and shops when you explain that mommy and daddy do not have enough money today to buy something extra.
- Use actual money
It is much easier for children to understand physical currency than the concept of a debit card. Counting coins and notes can also help younger children with hand-eye coordination and math skills. If you’re concerned about cleanliness, encourage your children to wash their hands after touching coins and notes.
- Give an allowance
Giving children their own money is a good way to start teaching them about how to save. How much you give is up to you. A SCR1 a day is SCR356 a year. For a young child that is a substantial amount of money. At the end of the year, it can be used to buy a gift or carried forward for an additional year. Your child will mirror this behavious later in life when taking out a savings plan. For additional lessons on earnings as opposed to inheritance, you can attach the allowance with activities such as completing extra chores.
- Set a savings goal
Using a clear jar as a piggy bank can help give children a sense of accomplishment seeing their jar fill up! You can even set goals by marking a line on the side of the piggy bank as a target to reach. This way, you’re teaching them about saving and making reaching goals exciting and fun! As they get older, they will set a savings goal in monetary amount for themselves and strive to reach that goal in a given time.
- Start a discussion with your child on savings plan
As time passes, your children mature and grow out of piggy banks. This is the pivotal moment to teach them about savings and the importance of a savings plan. If you have not opened a bank account for your child, this is a good time to do so and walk your child through the process. No, your teenage child is not too young to understand the banking system. It will also be a good opportunity for you to learn about the different savings schemes out there. Be sure to walk them through all of them such as a life assurance, fixed savings account etc Be sure to teach them about investment schemes such as treasury bills, buying shares, voluntary pensions and so on.