The Habit of Saving

A journey of many miles does begin with a single step. We can start instilling a saving habit in our children from the time when they can recognize money. Once it becomes a habit then they will never stop saving.

At the age of 4, children can tell that money is used to purchase various things like clothes, ice-cream, entertainment and many other things that they see their parents buying. Parents or guardians should use this opportunity to explain and demonstrate to their children that they have to work to earn and that one has to put money aside for the future.

In my childhood, if I wanted something like a bicycle, my parents would make me earn it by carrying out household chores such as washing the car or cleaning windows for a small pay that would go towards acquisition of my dream items. They also introduced me to a piggy bank where I would drop my coins and have my savings grow. This could sometimes end up being disastrous as I could pick all coins that I found to be in my opinion idling on any surface around the house and when the money is needed, it was nowhere to be found.

To encourage each of us, my parents could then top up the balance needed for the particular item and have a big event of taking us shopping with the hard earned cash where we could buy the item we had been saving for. This made us want to save some more each time we were given money for the chores we carried out or received monetary gifts from my friends or relatives.

Once children are able to write, parents can introduce the concept of a budget to build up to the culture of throwing in money into a piggy bank. To implement this, have a weekly allowance for the children and let them get into the habit of writing down how they intend to spend the money. Also stress that this is the money they will use to buy things like ice-cream, candy and birthday gifts for their friends. If they use up the money too fast or on items that were not in their budget, do not add them any money until they get to learn to live within their budgets. This will help them to understand why they sometimes would ask for something and the parents tell them that there is not enough money for the items they are asking for.

By the time children get to their teenage, education on investment vehicles available in the market such as real estate, equity funds, investment in shares and basics in business management can be introduced. This opens up the minds of children to get ready for adulthood and focus on saving towards achieving major goals that can sustain their lives.

more about habits here.

via Ezine