To avoid the next generation making bad financial decisions and to help them enjoy financially fit lives, children need to be taught the essentials about money.
If you are a parent, here are some simple ways to teach your children about saving money:
Get a piggy bank This form of savings is more meaningful for younger children who can’t add or count too well. Keep the savings visible: try an old jam jar as a savings mechanism and allow them to even draw pictures to illustrate what they are saving for.
Take them to a bank to open their account This helps youngsters understand where their money is going and introduces them to the concept of financial institutions. In doing so, you help your child prioritise short-term and long-term savings.
Model good spending and saving habits As parents, you have the biggest influence on the way children save or spend. Examine your own spending habits: next time you dash out to get the latest designer handbag or shoes, ask what message you are really sending to your impressionable children.
Show them the money We have to remember that children today don’t see cash and financial transactions the same way we saw them when we were growing up, so we have to consciously make sure that children understand cash as the basis for learning more about money later. When giving children an allowance or income, give the money in denominations that encourage saving. For example if the amount is R50, give out five R10 notes and encourage that at least one be set aside for savings.
By Thami Cele, Head of Savings & Investments, at Absa Retail and Business Banking.