Teaching your children how to be good with money is essential. Studies show that kids spending habits are set as young as 7. So, you need to set them a good example from a very early age.
Start by opening a savings account for your kids
One of the best things you can do is to get your children into the habit of saving. Studies show that around 50% of kids who have a savings account continue to save and spend responsibly as adults.
As you can see by clicking here it is really easy to do this. The UK government offers you the chance to put money aside for their kid’s future in a tax efficient way. Since then, tens of thousands of parents have opened junior ISAs for their children.
Each year, they have put aside as much as they have been able to afford for each of their children. Some parents have managed to save the maximum amount allowed under the scheme, which has resulted in each child having access to tens of thousands in savings, at the age of 18. Money that they have been able to use to buy a house, fund their university education or join an apprenticeship scheme.
Give your kids pocket money
As well as putting money aside in a savings account, try to give your kids some pocket money. Doing so enables them to start making their own purchasing decisions. It helps them to understand that everyone has a finite amount of money available, which means that they have to choose what they buy carefully.
It also opens up the opportunity for your kids to save for some of the larger items they want to own. This is how most children pick up the savings bug. There is something special about buying significant items using your own money.
Offer to match their efforts
To encourage them further, offer to match what they save. For example, double the holiday spending money they have saved up. If you cannot afford to do that, you may still be able to give them a percentage of what they have saved.
Teach your children about compound interest
Compound interest is magical. The fact that you can earn interest on the interest you have already been paid is very powerful. Provided you leave your savings in place, you can turn a relatively small pot of money into a pretty big one. But, getting your kids, and let’s be honest yourself, to really understand what is going on is pretty hard. Fortunately, someone has come up with a fantastic way to do it. You can read about it here. I promise you it is simple yet effective and well worth doing.
Set a good example
Last, but by no means least, is setting a good example. If you don’t have the saving bug, your kids are highly unlikely to have it either. As I said earlier kid’s spending habits are pretty much set by the age of 7, which demonstrates that the way you handle money has a huge impact on them. The biggest impact of all, by far. So, if you are not already spending wisely and saving now is the time to make some changes.
*Collaborative post*
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