Savings are very important in your life. Your savings helps you go on vacations, or save up for a nice house. Savings can help you get through a medical emergency, and many more life events. Helping your child along the way with their savings is something a parent can do to help them have a better life in the future.
Very young children
When children are born, some parents start a savings account for them right away. At first there may not be much to put in the account – birthday money from family, Christmas money, child tax benefits possibly, and so on. Even though the child is too young to understand, starting their savings for things like university early on give the savings more time to grow using compound interest.
Young children learning about money
As a parent, part of your responsibility is to teach your child about money. This includes what it is, what it can do, how to get it, and how to save it. Most children have no problem spending money because they have little concept of what it takes to get money. For this reason it is a good idea if children have to earn money in some way so the child knows why people go to work every day. Also this is a good time to encourage them to save up for something big they want to get. This will teach them about waiting for something they want, and help them learn to enjoy the anticipation. These lessons are best taught by helping the child open their own savings account for their pocket money – separate from their education savings. Expect them to make some bad decisions along the way. That is ok, in fact it’s better to make mistakes early and learn from them than to make them later in life with larger amounts of money.
Teenagers who want expensive items
Every teenager wants something expensive – a fast computer, a fast car, a flashy iPhone, or the latest flashy clothes. If you started early teaching them about saving, and what it takes to buy these things they will be ready to work to get what they want. For large purchases like a car, parents often help the children make good decisions by contributing to the purchase such as matching the child’s contribution, or paying for extra safety features and insurance. This helps parents ensure children don’t buy a clunker that is dangerous and a money pit. However, if a child wants to buy something that is a bad decision and won’t listen – let them because its their money and their lesson to learn.
Teaching children about saving
Over a child’s life, parents have to ensure that child understands why long term savings is important for their life and their future family. Its much easier to teach these lessons when a child is young than when they are older and usually more stubborn and set in their ways. Most of all parents should remember that helping children with savings, even helping contribute during money-scarce times, can really help everyone involved in the long run. Do mom and dad really want their 23 year old child back at home when they run out of savings? It would be much better to help them get solid savings that will serve them well and allow mom and dad to relax in their old age.