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Empower your children to start saving early

26 Apr 2021

children money

At Generation Wealth Management we believe that it is never too early to start teaching children about money! In this piece our Director Shai Patel gives his five top tips for encouraging good monetary habits in your children.

Whether you are a parent, grandparent, an uncle, aunt or godparent, you will appreciate that talking to children about money is important, encouraging the younger generation into good savings habits benefits not just them but everyone around them as it can start very interesting conversations.

Below are five ideas for talking to children about money – and some steps you can take to build their savings and encourage a healthy relationship with money.

Start children saving early

You can never start too early when to comes to building good habits. Buy your child a money box and encourage them to collect a certain amount of coins in an agreed time frame, perhaps from pocket money, this will help them understand the concept of saving. You can then sit down together, open the money box and count the savings – they will be amazed – and so proud – of how much they have saved.

Open a savings account in their name –this level of autonomy gives children a feeling of achievement, which can be a real motivator as they grow up. If there is a toy they particularly want, use that as something to save for, it will help them have a goal and something to work towards.

Savings accounts for children can be tax-free which is an added benefit.

Build saving into your daily lives

Money is part of our everyday lives and should be discussed freely. If you go to the shops talk to your child about what the different items cost, which is more expensive and why, let them count out money to pay for small items. Children love being involved and actions like this can help with number recognition, counting, addition and subtraction. It can be a really good way to include maths in their everyday activities, they will be learning without realising.

If your child breaks something or loses a favourite item, encourage them to save up for a replacement rather than buying it yourself. This will help them understand the value of their possessions.

Pocket money

As we said previously, giving children a level of autonomy over their finances is a good way to begin long-term saving. Pocket money teaches children responsibility, which is a valuable lesson when it comes to handling money in the real world.

Let your children make mistakes, they won’t quickly forget the day they wasted their pocket money on sweets just for the sake of it, rather than saving it for something of value – that’s an important lesson.

Don’t just talk the talk, walk the walk

We all want to protect our children from harm and don’t like to see them upset, but try to avoid the compulsion to bail them out if they run out of money before their next pocket money. They will learn how to be more careful if they have lived the experience of not having enough for what they want.

Longer term savings plan

We are all responsible for helping the next generation to get started and take control of their financial future. By making saving part of daily life, we can hand down good habits that will last a lifetime.

If you’d like to talk to one of our team about opening a savings account and making regular contributions for your child, as well as any tax implications this may have, simply get in touch.

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