Why it’s never too soon for your kids to start the savings habit.

 It goes without saying, that parents want to give their kids the best start in life, so they have a firm foundation on which to build their future lives. And one of the most important lessons we can teach our kids is how to deal with money. Understanding how to budget wisely and the importance of saving are vital life skills. It’s never too soon to help your kids develop the savings habit. Here’s some ideas on how to do it: 

Get them saving early

As soon as they understand the concept of money, start giving them a little pocket money, maybe in return for household chores as they get older. Discuss with them that they have a choice whether to spend the money all at once on small value things, or let it build up so they can buy something more expensive. Helping them keep track as their money mounts up in an old-fashioned piggy bank or savings jar, is a fun way to teach the value of saving to reach a financial goal. Keep the goals short term, however, as kids can lose interest quickly! 

Open a savings account for them 

Whilst saving physical money might be the easiest way to introduce saving to a young child, nobody would claim it’s exactly a real-world scenario. As soon as you feel your child is old enough to understand, set up a savings account for them and explain how it works. Understanding the concept of interest is vitally important for them to enable them to make sound financial decisions in the future, whether it’s to compare credit card, mortgage or investment rates.

Teach them about investing 

As they get older, kids should become aware that money can not only be saved, but also invested in a variety of ways to make it grow in value. Take some simple real-world examples that they can relate to, such as buying and selling items on an internet auction site, to illustrate how spending money can generate profit. 

The old family favourites of Monopoly or Game of Life are great ways to give kids an insight into how investment works. They give practice in decision making, risk management, and dealing with the unexpected whilst having fun. Let them know that this is very much how real-life investment works and the message won’t be lost.

Set a good example 

Kids learn much of their attitude to money from their parents, so let them see how you make your financial decisions. When the time is right, why not share with them some of the financial decisions you have made over the years and what you have learnt? Be honest about success and failure alike. 

Talk about real estate

 Whether it’s for buying their own home or investing in real estate for profit, as they grow towards adulthood, kids need to understand how the real estate market works. Buying property will likely be the single most valuable investment they are ever going to make, so feeling comfortable about the terminology and concepts involved will help them make sound decisions.