Getting them into the savings habit
15 August 2008
By the time they reach 18 they really need to have a good grasp of what money is all about or there maybe trouble ahead!
The time they spend at senior school is particularly important as it’s then they start to handle their own money - usually for the first time.
For those kids who have yet to heed the message, all is not lost.
Here are 4 basic steps to help keep your kids on the savings track:
Step 1 – What money they can save?
Get them to make a list of all the available ways they can raise money so that they can think about starting a regular savings plan. There’s birthday and Christmas money for a start and nobody would accuse you of being mean minded if, with their consent, you asked friends and relatives to give them money instead of toys, especially as they get older.
This is particularly true when you have identified the object of their desires such the latest high priced gizmo. This way they will see a rapid return on their efforts.
Step 2 – Get them used to saving part of their money
You could get them to set aside part of their pocket money, which you put straight into their savings account. They probably won’t miss what they’ve never had and will be doubly pleased when they come to claim their cash.
It’s essential to involve them in their savings; regular trips to the bank to deposit their money and to see how their savings are growing. Most banks offer those over 11 years a cashpoint card so they could keep track of the balance of their money in their account and have some access too.
Step 3 – Get them to start to earn their own money
Encourage them to put part of any money they earn from odd jobs into their savings account.
Make sure you put a fair price on the jobs you ask them to do for you. £5 to an 11 year old is a handsome return. Don’t settle for a shoddy ‘job’ though as that will ensure they understand that in order to be paid they have to deliver real value.
As they grow up they could start a paper round or do more chores around the house or garden. Once they become proficient you might even allow them to offer these ‘homecare’ services to friends, neighbours and other family members.
Step 4 – Encourage them to save regularly
It’s much easier to get your kids to save for something they want. Cash in the bank is not that exciting. That gleaming new stunt cycle is a whole different set of wheels.
You can help your kids by setting them a series of ‘milestones’ at which they cash in their savings and claim their prize. Hopefully they’ll soon learn to defer instant gratification for a greater long term reward.
