There’s nothing more rewarding than finally hitting your savings goal after chipping away at it for months, even years on end. That feeling of accomplishment is a powerful motivator, no matter your age. That’s why it’s crucial to set the foundations for good savings habits for kids early on.
Teaching your children about money today is a little trickier than it used to be. Many of us haven’t dealt with cash in years, so it can be difficult to make the act of receiving, exchanging, and saving money seem real. Still, there are plenty of ways to help your kids become super savers for life. Here are our top five.
1. Monkey see, monkey do
Children learn by example. So, if you openly demonstrate good savings habits, chances are, they’ll follow your lead. Set a savings goal for yourself or the family and keep your little ones in the loop.
Keep a visual indicator of your savings target in the house, like on a whiteboard or on the fridge. Celebrate your progress together, but don’t forget to let them see when something gets in the way of your goal. Your honesty will teach them that it’s okay to stumble now and then, as long as you jump right back on the wagon.
2. Make it real
Modern transactions are now mostly ‘invisible’ according to MoneySmart. Instead of handing over colourful bank notes or a pile of coins, we tap our phones, smart watches, and even our coffee cups to pay. But while cash remains legal tender, it can be a powerful tool for teaching children about spending and saving.
Plan a trip to the ATM once a month and stash the money away in a hidden spot for pocket money time. After all, there’s something very exciting about seeing your savings jar fill up.
3. If you can’t make it real, at least make it visible
Coin jars are an excellent visual learning tool, but sometimes they gather more dust than interest. Once your children understand the basics, move their money into a high interest savings account for kids. Then, during screen time, take them through an online banking app to see how their saving is going. This will help them get into the habit of regularly reviewing their accounts, which is useful for reflecting on recent spending and keeping an eye out for suspicious activity.
4. Understanding small rewards now vs a big reward later
Like many adults, kids often choose the short-term win over the long-term goal. Instant gratification is a trap we all fall into, which is why it’s important to give our kids (and ourselves) cues to remind us of what we’re saving for.
Each time they’re tempted to spend their money on something else, ask them if it means more to them than reaching their goal. ‘Do you want this soccer ball more than you want your skateboard?’
Even if they do end up dipping into their savings, at least they will understand that their goal is now a little further away.
5. Teach saving as a skill for life
Working towards a specific goal can be incredibly motivating, especially for kids. Whether it’s a new toy or some spending money for a family holiday, having something to look forward to is often what keeps them on track. But saving shouldn’t always be seen as a means to an end. It’s a life-long habit that can provide security later in life.
Your kids probably won’t jump at the idea of building up an emergency fund or saving for a house deposit just yet, but as they get older, you can shift the discussion towards saving for the long term. When you teach your kids about budgeting, encourage them to allocate a regular amount of their pocket money to savings. That way, when they start earning a wage and managing their own expenses, saving will be second nature.
Are your kids ready to start building smart savings habits? Set them up for success with a savings account for kids.