Saving money is one of the most important aspects to securing your financial future. When taught early, it becomes easy to develop good financial habits that will yield long-term benefits.
Ester Ochse, Product Specialist at FNB Wealth and Investments says, “encouraging children to save from an early age plays an important role and will help when they get older. Exposing your children to saving and managing their own finances early will allow them to make mistakes, learn from their mistakes and identify habits that will help them be more responsible with their finances.”
Ochse shares tips on how parents can encourage children to save:
Help them set a goal: firstly, you need to help them set a goal and demonstrate what they stand to achieve if they reach their goal. For example, if your child wants to purchase a new TV game, encourage them to save from the pocket money they receive and set a timeline to achieving the goal. When they reach the goal, they will see the benefits of saving and working towards what you need.
Wants vs needs: understanding the difference between needs and wants is crucial in helping children avoid spending money on unnecessary expenses. Once they understand the difference, they will be more cautious about where and how their money is spent.
Match their savings: consider matching your child’s contribution. For example, if their monthly target is to save R300 a month, match it with R300 to make it R600. This will encourage them to continue saving because they will see progress and value of their savings.
Lead by example: when you receive your salary every month, sit down with your kids and show them how much you are saving towards their school fees. At the end of the year, show them how much you have saved as well as the interests received on savings. Furthermore, show them the discounts that applies when paying school fees in advance and demonstrate how much you will save because of paying school fees in advance.
“One of the best ways of assuring your children that they are capable of saving, is to let them take control of their savings journey. Guide them through the money management journey and help them track their progress monthly. This is one of the best ways to get them started on their savings journey,” concludes Ochse.