Life is unpredictable and that is why every financial guru saves. With natural disasters and pandemics like Covid 19 being a real threat, we need to save for a rainy day. As a parent, we see the value of passing good saving habits down to our children. But how can we effectively teach our children to save and make saving a purposeful lifestyle?
Here are my 3 ways to teach kids to save:
1. Start a conversation about Money
From a young age, kids can grasp concepts like spending and saving. We started our eldest to buy food from the Hawker as young as 5-6 years old.
Following her to the stall and teaching her to order food is an essential life skill that we stress on. Naturally, we also look for friendly hawkers who are willing to role-play together with us. Teaching them to recognize the different colors for each denomination is also fun and as they grow older. Together with simple addition and subtraction, these are essential life-skills that we want the kids to pick up fast.
We have 3 kids and their ability to learn varies. One of the kids is bolder and unafraid to engage the hawker, which is an essential step in the whole process. The other kids may share a similar trait, but there are terrible at their Math. Each child is different and it is important for us to manage our expectations.
2. Get a Piggy Bank
Most kids start with a Piggy Bank and my family is no exception. We only started giving the kids pocket money when they entered Primary school, but the concept of saving and setting money aside started earlier.
When grandma or relatives give an ang-pow, we teach them to save the money up and to deposit the money into a Piggy Bank. In Primary school, when they get pocket money, we teach them to set aside 10% of their money for a good cause.
Instead of Daddy just buying them a new toy, dress, stationary or shoe, we teach them to save for that desired item. To help my kids save, I also give the kids my change. Using a simple glass container, Daddy and the 3 kids are excited to see the piggy bank fill its way to the brim and we celebrate with them when they are able to reach their goals.
On a side note, one of the most fun trips that we enjoy is bringing the Piggy Bank to the Bank. Together with ATM machines that accepts coins, their eyes sparkle with satisfaction, when they hear and see their hard work paying off.
3. Teaching them about the Bank
One of the fun educational lessons that we teach the kids is about the Bank. We will tell them that when we were young, our grandparents will keep their money in an old milo tin under the bed. We reassure them that there is no such treasure under Daddy and Mummy’s bed, as keeping the money at home is not a safe option. With theft and burglary being undesirable outcomes, the bank is the safest option as they are well guarded.
Another teachable moment is the lesson on interest rates. As Banks give us an incentive to bank our money with them, the kids are naturally excited to hear that how their money can grow. To bring in realism to our lesson, we show them websites which display real life interest rates in a clear and concise manner. Check out the most updated list of best savings accounts in Singapore.
The MoneySmart website gives a full comprehensive list of bank interest rates and even gives one where realistic interest rates are displayed. These are the interest rates after taking into account the finer points of these bank accounts. I did not go thru the fine print with the kids as they were not ready for such information when I engaged them on this topic.
Be a Saving Example
All parents want their kids to save, but they only learn when we lead them. Parents need to effectively model good saving habits and demonstrate good stewardship. After all, at the end of the day, we don’t want them to be just good savers, but also a generation that stewards their resources generously.