Saving money as an adult can be difficult but when it comes to helping your children save money, it doesn’t have to be.
It seems as though young children of today’s age are becoming smarter and more resourceful than we were in our time. This has given rise to new ideas and approaches when it comes to how we view the world and increasingly, how we view and deal with our money. Helping your child to save from an early age is one of the best starts that you can give them in life, and thankfully, there are a number of useful ways to do this.
Starting a savings account for your child is one of the easiest things to do and hopefully will reap many rewards for your newborn. It’s a great way for doting grandparents and extended family to deposit monetary gifts and contributions for the family’s newest addition. It’s also an easy way for you to start putting away small amounts of money towards their bright future.
For children under 7, a savings account will need to be opened by a parent on their behalf, whilst children aged 7 and over are able to have a savings account opened in their name. You can usually open up a savings account with just £1 however this may vary depending on the provider. Child savings accounts are usually free, and you do not have to pay a set monthly amount into the account to keep it open.
Some parents may choose to have sole control of the account up until their child turns 16, however both parents, extended family, and your child, can make deposits into the account at any time.
It’s important to consider how often you or your child may need to access to their account when choosing the best savings account for your child.
Some savings account options include:
Remember: There is usually no tax to pay on any funds in a child savings account however you will need to let HMRC know if your child receives more than £100 in interest on their savings.
There are always a couple of coins hanging around, either in our pockets or hidden in obscure corners of our houses and a piggy bank is a great way of saving bits of change. If you’re prone to handing leftover 50p and pound coins to your children, encourage them to tuck those coins away in their piggy bank. You can even make it more fun for them by shopping for a piggy bank they like the look of!
Children are inquisitive and the older they get, the more they are going to want to know why we do certain things. For example, why do I need to save money and what will it be used for? A good place to start is finding out what their needs and wants are. Maybe they want some new trainers or a PlayStation game – or perhaps they’re not quite sure. Discuss with them the cost of the item or items they would like to save up for and together, work out how much they need to save each week to get it. This way, it keeps the focus away from having to part with their money and more on what their end goal is, which in turn will make saving much easier for them.
Saving money without knowing what it’s for can make what should be a fun experience, suddenly quite daunting and never-ending. Working towards short timelines can really amp up the fun-factor when teaching your children to save. Birthdays, Christmas, and any other holidays you might celebrate throughout the year are a wonderful way to keep kids engaged and excited about the whole process.
Regardless of whether you’re a child or an adult, saving money can be challenging. The older you get, the more financial responsibilities start to creep up – especially if you have children, but this doesn’t mean saving is impossible. Children model what their parents do so it stands to reason that the more they see you saving, the easier it is to get them involved. They will appreciate the importance of saving money simply because they will have seen you doing it for so long.
An open dialogue is the key to creating a healthy relationship with your money and the same is true when it comes to discussing money with kids. Simple conversations around how to prioritise their needs vs what they want and helping them set goals around this is a great way to open up the discussion. They don’t need to be bombarded with long winded financial jargon or forced to be overly frugal with their pocket money, but they do need patience and guidance, and it starts at home with you.
As children get older and become adults, they’ll realise that there are times when people may have to get a loan online during an unexpected time of need. It’s important to clarify that taking a loan should be a considered decision, and should only be done so if it is an affordable option.
Encouraging your children to save earlier on in life, towards things like emergencies or even social commitments, may reduce the chances of them needing to borrow in the future. They will gain a better understanding of the importance of savings, helping them to develop a positive attitude towards saving, which will hopefully ensure that they are better prepared for life as they get older.
Check out our other great content in our Info Hub, with articles about the different types of credit products, money management tips and help with saving money!