I have this memory of me as a kid every Christmas, opening up my alkansya or piggy bank with a big grin on my face.
"Oh, the joy that I'll finally get to buy what I was saving for, that whole year!"
I don't remember how young I was back then, but I know that my parents taught me about saving money at an early age. And that is something Jaear and I are working on with our kids- Tristan, Athena, and Brianna.
It may sound cliche, but as parents, we only want what's best for our children. So aside from providing for their needs, we also equip them with lessons that are not just school taught. And that includes teaching them to have a healthy perspective and attitude towards money and saving, this way we give them a headstart in life.
Here are some ways to teach kids the value of money and saving for their future.
1. Start them young
As parents, we are our children's first teachers. While we teach them about basic survival, hygiene, good manners, it is also important that we teach them the value of money. A past study by the University of Cambridge suggests that kids as young as seven years old can already learn the basics of using money wisely.
2. Wants vs Needs
Children know that money is what people use to acquire their essential needs but may have trouble identifying the difference between wants and needs. They may even think that as long as they have money, they can get everything. Especially these days wherein they are exposed to social media, watching videos of kids unboxing and playing with a lot of toys. They may ask you to buy this and that because they saw it online.
One way to teach them about wants and needs is by including them in our budgeting. We explain to them where our money goes. We list down our essentials or needs, stuff that we can't live without - food, electricity, tuition fee, insurance, and savings. Once these are fulfilled, then that's the time when we can spend on our wants.
3. Let them earn/work for their own money
We have to let our children understand that handling money is a responsibility rather than a privilege. As the saying goes, "money doesn't grow on trees". We don't give our kids allowance as all their needs are already provided for. So one way of allowing them to earn their own money is by letting them do some chores. We've set a schedule on who's going to do a certain chore daily. Each chore is equivalent to a certain amount. If one doesn't fulfill their task for the day, they won't earn any money and instead will be given to the one who gets to fulfill it.
For older children, another way of earning their own money is by allowing them to explore their entrepreneurial side. They can sell lemonade, homebaked cookies, pastries, etc. As for me, when I was around 12 years old, my parents let me sell BBQ in front of our house.
4. Delaying gratification
Not recognizing wants vs needs may end up spending money on things that only give pleasure especially if they are earning their own money.
To delay gratification, there are steps to teach kids to become patient “postponer” and hopefully a better money saver.
Psychologist and published author David J. Bredehoft, Ph.D. said these steps include:
a. creating an environment where self-control is consistently rewarded;
b. modeling self-control for the children;
c. teaching them to use distractions;
d. developing and practicing “if-then” plans and teaching them to set achievable goals.
5. Teach them about saving money by using a piggy bank
Now that they are earning their money through chores, or maybe they got a monetary gift for their birthday or Christmas, they may be tempted to spend it so it's best to introduce to them the idea of saving.
The goal is to fill their piggy banks for one whole year. After a year, they have the option to spend some of that money for what they really want- like a reward. The rest, they'll continue to grow over time for future use.
One way to encourage them to save is by offering them incentives. In our case, I told the kids that I will double whatever amount they'll get to save for 1 year.
6. Open up their own savings account with a bank.
Once their piggy banks are full, it's time to level up and open up their own savings account. Good thing that BDO has a Junior Savers Account that parents can open on their children’s behalf.
It’s easy to set up and has an affordable initial deposit and a low maintaining balance.
In addition, parents can also help grow their kids’ initial funds by scheduling regular deposits using their BDO Digital Banking account. Just set the amount and date of transfer and easily, the kids’ savings will grow while teaching them more money lessons.
To read more about it, go to https://www.bdo.com.ph/personal/accounts/peso-savings account/junior-savers