You can never undermine the importance of savings. Having some cash in case of any inevitability raises self-esteem and confidence to face a financial crisis. However, it is quite unfortunate that we realize the importance of savings by trial and error.
As a parent, you need to teach your children the value of savings at an early age. This will help them not to go through the same ordeal of trial and error. The culture of savings in the community should start with kids being taught its importance at an early age.
This article will show you 7 effective ways in which you can instill a saving culture in your children and the community at large.
1. Lead by Example
Children learn through observing and later imitate a grown-up person. You can introduce the concept of money to your children by explaining its value. A practical visit to the bank will do the trick. When you need to withdraw some amount, carry your children along. Explain to them where the money came from and how it will be used.
2. Teach Them about Sources of Income
Teach your children the various sources of income so that they can understand how to get money. It is good to note the legit methods of earning income for accountability purposes. Also, tell them why it is important not to spend all the money earned.
3. Introduce Piggy Bank to Your Child
After your child has understood the value of money, take the next step to instill a savings culture in them. You can introduce a strategy of rewarding your children and then make them save what they have earned in a piggy bank. This plan will teach them that money is earned through hard work and, therefore, should be kept well for future use.
4. Open a Bank Account for Your Child
Some banks have friendly banking halls for children to encourage savings. Here, they will learn why they need to save. They will also get to meet with other children who will share their experiences on savings.
It is recommended to let your child decide how to keep the money before taking the accumulated savings to the bank. You can also introduce online banking for easy access.
5. Create Timelines Together
In as much as income to children might not be consistent, it is crucial to create timelines. These timelines should be guided by targeted savings. You can also set the timelines based on what the children want to buy. Together with the children, specify the period when a certain saving should be achieved.
6. Start Lessons About Spending
Your child must keep in mind that savings will be determined by how wise they spend their money. By outlining the most pressing needs and the least demanding ones, your child will manage to spend wisely and have some money for savings.
One of Warren Buffet’s famous sayings goes, “Do not save what is left after spending, but spend what is left after saving.” This is something that your child should live by.
7. Reward Children for Saving
From time to time, assess how much your children have saved then reward them accordingly. Rewards could be through bonuses or physical gifts. These rewards should be interpreted as profits, whereby large savings allow them to earn even more profits.
However, avoid freebies that don’t relate to savings because they might not understand the value of hard work.
Teaching your children how to save money will translate to good financial habits in the future. Walking through the financial path with your children is exciting and beneficial. When you teach your child to save, they will be able to benefit from money management in the long run. Additionally, it will help inculcate the culture of savings in the community.
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