Saving habits can be crucial and the idea of saving is believed by many as an essential skill to be instilled in children from an early age, along with how best to do so. After all, the way we use money is changing, with more emphasis now on 'virtual' money than actual physical coins and notes.
While physical money is still prevalent, the use of debit and credit cards and contactless payments represent a convenient alternative to carrying cash. This means teaching children good financial responsibility with all types of money, sooner rather than later, is something parents may be keen to do.
Teach Children to Save Day might be an American program held on the 28th of April but, in the UK, people can also benefit from this educational event that promotes good money habits in children. After all, learning to save at a very early age could potentially create a foundation for a lifetime of saving.
The program - sponsored by the American Bankers Association - has been running since 1997 and consists, in essence, of bankers giving presentations and lectures in schools. Teaching saving habits at an early age may help children to make better financial decisions in the future, including when it comes to choosing the right life insurance policy!
This program trends with the hashtag #TeachChildrenToSaveDay on Twitter and could be a great opportunity for UK families to come together and teach their kids how to save money as well.
It is common practice to start giving children pocket money for them to manage, which brings many advantages. Beginning at an early age could help children to be more aware of the value of money and what they can purchase with it.
A 2016 study found that parents in the UK are fairly generous when it comes to giving pocket money, with children under five years old receiving £2 a week, compared to, for example, Spain (80p) and the Netherlands (40p). 70% of the pocket money earned by UK children comes from doing domestic chores, and 18% of parents let their children decide what they do with their money.
This could help children to develop a sense of financial responsibility early on, since they will be ones deciding whether or not they should spend the money (and on what) or save it.
The way parents are paying their children is also changing. Research commissioned by Intelligent Environments discovered that 80% of parents, from a sample of 2,000, are teaching their children how to manage their money in a digital capacity. 34% of the pocket money is deposited into a child's bank account in digital currency.
One of the first things that parents could do when they want their children to learn savings is talk to them openly and honestly about money. They could provide answers to any questions, no matter how simple they are, and maybe teach them that sometimes they have to wait until they have enough money saved to buy a toy they want. These simple lessons could teach children that spending money straight away is not always the best thing to do and that saving helps them to afford something they may want even more.
Learning finances might not be every child's cup of tea, so parents may want to approach the subject with fun in mind. Offering rewards when children manage to save a certain amount of money (similar to a bank's matching savings program), taking their child shopping for something they want but that they can only buy with their own money or helping them count their money (but let them be the one to hand it over to a cashier) are all potential ways to allow children to feel empowered and responsible.
While money is not necessarily an abstract concept, it still benefits from visual and physical interactions, especially when being taught to children. They could start putting money towards something they want in a jar, which could even be labelled with pictures to make it more appealing and remind the child what they could get if they reach their goal. Also, if the jar is transparent, kids will enjoy watching their money grow over time!
Young children may not necessarily learn about money or budgeting in school, which is why initiatives like the Teach Children to Save Day could be so important. Empowering the next generation means that children may not have to struggle to learn financial responsibilities later in life and could start building their future right now.
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