SMART SAVER TIP #1: Money doesn’t grow on trees – a concept which can be hard for children to grasp!
Teach kids to plan:
- Get them to create a dream list of what they would like to spend their money on. Prioritise the list in order of necessity or importance.
- Discuss with your child ways they can earn money such as doing chores, recycle cans, mow neighbours lawns, babysitting etc. Don’t forget to discuss how much they can earn doing these jobs.
- Create a plan of how long it will take to save enough money to buy the items on the top of their dream list or the entire dream list.
- When they have saved enough money for their purchase, let them take the money to the shops to buy the items.
SMART SAVER TIP #2: If not on trees, how does your money grow?! Teach kids to separate their savings and spending money.
Teach kids to separate their savings and spending money
- Once they start receiving their pocket money you will find they want to spend it all straight away.
- They need to be able to treat themselves and spend some of their earnings otherwise they will give up trying to earn money. They need to save some and spend some. What you need to work out is what is the best split based on everything on their dream list of purchases.
- A simple concept is for them to have separate money boxes one for saving and one for spending. You need to monitor the spending box to make sure it is spent wisely and make sure the savings box is used for bigger purchases or saved for the future.
- Having simple conversations about what they are going to spend their money on encourages the savings and remember to lead by example.
SMART SAVER TIP#3: What do you mean I can earn interest on my money?
Teach kids what interest is all about
- After saving their money kids need to understand that they can make this money grow by investing it with a bank
- Have a conversation with your child about interest and how banks calculate it. The next step is to talk about compounding interest and how you can earn interest on interest. Watch the smile on their faces!
- Visit your local bank and open a bank account for your child that earns interest. They will receive bank statements which will encourage them to regularly deposit money and see the interest the bank adds. This way they can watch their money grow – you never know they may stop spending it.
- Most banking websites have calculators that help you work out how much your child will need to save to reach a savings goal with interest included and the different ways to save with a bank.
- This is an ideal time to talk about the future and what they could save for such as higher education, cars or even houses.
SMART SAVER TIP#4: Where has all the money gone?
Teach kids how to monitor their spending
- Once your child has a bank account and even more so when it has a cashflow card you need them to monitor what they are spending their money on.
- We need them to think twice about spending money as it is amazing how quickly children can spend it.
- One way is too get them to keep a notebook or on a list on their computer of all their savings (how they earnt their money) and what they have spent it on.
- Get them to keep receipts for all their purchases and the bank statements they receive from the bank.
- If your child does not have a bank account yet you can get them to regularly count the money in their money boxes and a list of all their spending.
- All of this will make them think twice about spending.
SMART SAVER TIP#5: Charity starts at home.
Teach kids that they can help others
- We need to teach our kids how to share.
- The money they earn can also be used to help other people, it doesn’t matter how small an amount they donate it all counts.
- Get them to have a third money box where they put a portion of any money earnt into there for a charity they can relate to.
- Discuss with them about local charities and what they do for the community, get them to pick one that they would like to support.