How to encourage your kids to save money
As an adult, it’s so important to be financially smart and savvy. There are many easy ways to save money, whether it’s opening a savings account, or even a tax free investment or tax free savings account, to ensure you get the most out of your savings.
For kids, the task is much harder. Generally, they want instant gratification and can’t see the bigger picture of saving money when they could be buying a new Barbie or LEGO set.
So, how do you encourage your kids to save money and gain this understanding?
- Firstly, explain to them how money works and not just that it “doesn’t grow on trees”. Tell them about what it means to earn money, how there are lots of things to pay for, and how the family should work together and not waste anything — whether it’s food or electricity — in order to make money go further. The sooner they understand more about money and how it’s earned, the quicker they can grasp the concept of saving it.
- Instead of buying them presents or toys, why not give them pocket money every month that they can choose to spend as they wish? You can encourage them to save up over a few months for something bigger they might be eyeing, so that they can start to understand the value of saving.
- The piggy bank is still a great tool to help youngsters to understand the concept of saving. You can encourage them to collect coins around the house, or even “earn” them through pocket money. In this way, kids can literally see their savings and watch it grow.
They can also practise their counting and number skills (bonus!) and reap the rewards when they cash in their money to buy something, or cash the coins in for notes in order to start filling up the piggy bank again!
- Even better, and when they’re old enough, open an account like MyWORLD that they can use to save money and earn interest at the same time, teaching them another valuable lesson.
A MyWORLD bank account boasts a Power Pocket and Savings Pocket feature which can be used as savings accounts to teach your child about money.
A Power Pocket is a separate account linked to your Primary MyWORLD bank account. Each Power Pocket comes with its own account number, debit card and PIN, and earns the best savings interest of 5.5%* on positive balances.
The Primary Account holder (parents) can add a Pocket User (child) to this account to conduct day-to-day transactions like paying for their toys, takeaways and making in-store purchases, using their own debit card.
Use this opportunity to explain to them how interest works and how the bank pays them to save, so that they end up with even more money.
At first, they may choose to spend all their money as soon as they get it and then have nothing left for what they want, but this is a fantastic lesson in itself.