A child’s personality gives a reflection of the habits and behaviour inculcated by their parents. Saving is as necessary as consuming food. There are many aspects involved in financial learning and saving is the apex of financial learning. Being able to save is critical for your child’s future, it secures your ultimate well-being, and it builds self-confidence and slowly starts making you much more independent.
It is necessary to teach your child the importance of saving. Trying to make your child understand the importance of saving money through lecturing them does not help. A graduate needs to work in a firm to use the knowledge learnt in his college. This gives them a hands-on experience. Similarly, a Kid’s Savings Account helps your child to understand the Importance of Savings.
As a child, each one of us was boggled with the idea of how money can earn more money. Younger children may not understand the power of compounding, it is necessary to explain this concept to them. Click here to understand the power of compounding.
Operating a bank account not only helps you to understand savings but also helps you to understand what all things are involved in operating a bank account. The monthly statements, passport book and any incentives the bank may offer can help get your child excited about the whole experience of operating a Bank. Since most of today’s children are tech-savvy, reviewing account balances online or in the bank’s app can be fun as well. Watching their account grow over time can encourage even very young children to save and to make wise spending choices.
You can help them understand this also by comparing your account with your child’s account. Log into your account on the Bank’s app through your mobile and on a weekly basis, you can explain what a debit transaction is and what a credit transaction is.
Explain to your child that a bank is a safe place to keep your money, even if someone steals all the money in the bank, or if the bank goes bankrupt, your child would not lose the money. You can add money to your savings account through a deposit and you can take money out when you need it through a withdrawal. The bank helps you keep track of your money by sending out statements that arrive in the mail or via email. Your child can use a folder on your computer to keep track of the statements.
We encourage you to operate your Bank account from home but when it comes to helping your child to understand how a bank operates. Request one of the staff members at your bank’s branch and discuss the various types of bank accounts that the Bank offers especially the ones especially for your children. As you open the account, the associate will probably show your child the special book where he or she can record deposits and withdrawals.
In order to begin saving, your child will require some resources. Start giving your child an allowance and let them choose how to spend their money. As your child grows older encourage them to take up part time jobs which can help them increase their savings.
Your ultimate goal as a parent is to make your child financially independent. The process of becoming financially independent starts with learning from your mistakes. When it comes to money, it’s better for your child to make mistakes when they’re young and the financial stakes are low. If your child spends all of their money, let them face the consequences. You could extend a small loan to them, but always with the requirement of repaying the loan.
At the end of the day, it is important for your child to understand the best way to move forward and improve their money management skills. Remind yourself that you are setting a strong example and try to talk openly about how you are able to achieve your own saving goals. You are their role models and at all times you are setting an example. Make sure that you are aware of how you handle your money whether it is in the bank account or the money in your wallet.
Once they become teenagers, make them set periodical family budgets (could be weekly or monthly). This will help them see where they can save more and also will help them realize the true value of money. Give them a few discretionary expenses like groceries, vacations and entertainment. Let them how much should be spent, when should it be spent, when it should not be spent. Encourage them to research online. Even if they do make mistakes, it will very minimally impact your overall finances but it will definitely teach them a valuable lesson
Following the above tips will give your child the real life exposure they require, and the financial experience they need. It takes time to learn how to save. The natural human tendency is to spend and enjoy today rather than think about tomorrow. Encourage your child when they succeed, help them learn from their mistakes in supportive ways and encourage them to learn further.
So go ahead open a Bank account for your child. You can find information about the kid’s savings account here.
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