Managing your money: Raising money-smart kids by educating them about saving early!
Raise money-smart kids by instilling financial nuggets of wisdom at an early age. Get tips on how you can do this here!
One of the most important things you can do for your kids is to introduce the concept of saving. The kids who learn about money and savings at an early age tend to start their own savings earlier. In the long run, this habit is rewarding.
Here are 5 ways in which you can educate your kids to save:
#1 Organise your money at home
Loose coins should be kept orderly. Something as simple as organising the money in your wallet is a strong statement for the kids. Money is not just a piece of paper or metal but it has value beyond its looks and therefore every cent must be spent and kept wisely. Let them know how saving money is appreciated.
Drive the lesson home by paying a visit to a bank, letting them see how money is serious business. Once your child is ready, help him open his very own account. He can deposit the money he has and you can teach him that money grows when it is invested.
Make sure to choose a kid-friendly savings programme, such as the OCBC Mighty Savers® Programme, which lets you open a joint OCBC Monthly Savings Account with your child under 16 years of age.
Then educate your child about the savings account. The OCBC Mighty Savers® Programme provides you with monthly e-statements, helping you illustrate financial concepts such as interest, and track the numbers as well. You can also encourage your child to play the Mighty Savers® Game App, which helps kids understand the importance of saving in a fun way!
#2 Create goals with your kids
Saving is important but saving without purpose is just a notch better than spending without thinking. Talk with your kids about how you are planning to spend your savings. It could be for their tuition fees, their new dress, next summer’s vacation, or just for a rainy day.
If ever you think that their target is unimportant, suggest to them other essential and interesting things on which they can spend their money. With regard to spending decisions, you still know better and must patiently bestow financial wisdom unto your kids.
Then ask them how they look forward to using their own savings and what their timetable is. If their plan is unrealistic, try to explain to them that their money will not be enough for their goal so they either set aside more from their allowance or they save for a longer period of time.
#3 Help them track their savings
A list is important to keep track of how much money they already have and how far they are from achieving their goals. It will also help your kids learn about the importance of transparency and patience.
When they are old enough, teach them the concept of interest. To make the lesson more rewarding, OCBC Mighty Savers® Programme helps your kids earn an interest of 0.40% p.a. instead of the usual 0.05% p.a. if you deposit more than $50 in the joint Monthly Savings Account every month without withdrawing! If you also have your Child Development account with OCBC bank, you earn an additional interest of 0.40% p.a. which brings it to a total of 0.8% p.a.!
#4 Remember that taking money from others is stealing other's time and energy
Money’s true value is the time and effort you spent to earn it. Therefore, respecting the hard work of others can be shown by letting people decide on what to do with their savings. It might be true that the money your children have come from you, but being able to save money is “Effort” with a capital “E”.
Just ask those who’ve been working so hard for years but haven’t been able to come up with a month’s worth of emergency fund. By respecting your children’s accomplishment to save, you’re teaching them a lesson that they will carry as they grow older.
Exposing kids early to the concept of banking will pique their curiosity in making the money grow. When they want to save what they have, they would have an extra choice than what they have now.
#5 Reward achieved goals
Rewarding your child when a goal has been reached is a bonus in itself as the real award is the fact that your child, at such an early age, reached a financial goal.
The icing on the cake? When asked what they plan on doing with their savings, if your child answers that they plan on continue saving or dabbling into investments, then you can go ahead and give yourself a pat on the back. Not only has your child become a step wiser with their finances, but you’ve done your job in making them money-smart.
The secret with these steps is doing them together. You will need each other’s support to achieve your goals and learning. Of course, you are the one on the driver’s seat here. But always remember that by showing respect for your children’s decisions regarding their own money, you are training yourself in self-control in handling your family’s finances.