Five ways to teach your kids about saving
In order to mark ‘Teach Your Children to Save’ day, The Share Centre’s chief executive Richard Stone shares his top five tips to break down the topics of money, saving and investments for kids.
Today marks ‘Teach Your Children to Save’ day – an important initiative that focuses on the importance of teaching children about all things money-related.
“Start small, and speak often – empower your kids to make decisions about money and saving, offering rewards if they save their pocket money or cash earned from chores,” explained Richard Stone, chief executive of The Share Centre.
“You can even talk about investing: tell your children you own a little bit of the companies you shop in every day to spark their interest, or point out famous companies which are doing well or badly,” he added.
Here are five ways to get started:
Tip 1 – Talk about money
We are all naturally reserved when talking about money, but it’s important to do this with your children. Talk about the reason you go to work, what earning money means, and what different things cost. Discuss how much things cost relative to each other and ask your children whether they think that’s right.
Tip 2 – Use cash
One of the biggest challenges today is that money is intangible. We all use our debit or credit cards and pay with contactless cards. Using cash is tangible and shows children what money is. You can even go one step further and allow them to pay using cash. This helps with maths, adding up the price of things and working out what change they might be due.
Tip 3 – Encourage them to earn money
Again, this helps to show the value of money and the concept of earning and working. If you pay them in cash, you could then allow them to spend that cash or perhaps take some of it to a bank or building society and put it into a savings account for them.
For older children you can have more detailed conversations about savings, interest rates and even investing. The idea they could own a little bit of Tesco or Marks & Spencer makes for an interesting conversation when out shopping in those retailers.
Tip 4 – Show them other currencies
If you are on holiday overseas, make sure you get some local currency. Explain that not every country uses the same money. Talk about the pictures on the notes – they may well depict the head of state, for example, or places of interest. Explain what the exchange rate is and work out whether familiar things cost the same e.g. a favourite chocolate bar.
Tip 5 – Lead by example
Children learn by example, so the best way to teach your child about saving money is to save money yourself. Have your own jar of money that you put coins in regularly. You can also show your children what their Junior ISA or Child Trust Fund is worth after saving over a period of time, relative to what you have contributed on their behalf.