Simple Ways to Teach Your Child Good Financial Habits
Early instilling of sound financial practices in children can prepare them for a successful financial future. Instilling a feeling of delayed gratification, promoting goal planning, and encouraging the development of responsible money management skills, such as differentiating needs and wants, recognizing the worth of money, and making calculated financial decisions, are all part of this.
Learning good financial habits is a valuable life lesson, but it’s not something that’s necessarily taught in school. It makes sense then for parents to bring up the subject with their kids. But how do you instil good habits in them, while creating a positive association with money? One way we can teach them about the importance of savings is through a practical approach in our everyday lives.
1. The Weekly Shop
Your little ones can pick up lots of money management skills from daily life. A trip to the supermarket, for example, is packed with teachable moments – whatever their age! Giving smaller children a euro or two and letting them pick and pay for a treat can help them grasp the concept of money and its value. As your kids get older, the weekly shop is a great time to teach them about budgeting. Get them involved with writing the shopping list, and let them tally up the groceries as they hit the trolley.
2. Money Management
Cash in a birthday card, pocket money, or the odd sneaky fiver from a grandparent – there are lots of occasions where kids will be given money of their own. These are great opportunities to help them learn how to spend or save it responsibly. Give them a tangible way to see good money management in action by setting up three jars or envelopes marked ‘spend’ ‘save’ and ‘give’. Then help them to divide their money among them. The spend jar can be used whenever they like. For the savings jar, steer your child towards a realistic short-term savings goal – maybe a new toy. For the give jar, help them to pick a charity to give a small portion of their money to. You might be surprised how keen children are with this one, and it’s a great way to teach social responsibility.
3. Saving Up
Once your child has grasped the concept of money management, you can introduce a more structured saving option, like their first savings account. Make a day out of going into your local branch and setting it up. You can also set up an online saver account in your own name, and use it to store any monetary gifts you’ve received for your little one, or your children’s allowance payments. You can transfer as little as €10 per month, and put the cash towards things like school fees or childcare. If you’re an AIB customer then there’s no need to take a trip to the bank to set up this account, you can do it online or through your mobile app. Start now and get into good habits, which will help serve you in the long term.
4. Making Wise Choices
Use everyday moments to talk through your spending choices, and involve your child in that conversation. In the supermarket for example, you can weigh up the benefits of a brand-name item versus a generic one. You can even turn it into a game by trying a couple of products out and taking a family vote at the dinner table on which was better. This will help them understand the concept of value.
5. Learn in a Safe Environment
Before your children go off on a class trip or outing, it’s important they understand how to budget. Let them practice by handing the reigns over to them for an event, dinner or family day out. Make sure to give them lots of praise for a job well done!
Want to Get Your Family Finances in Good Order?
At AIB, we have a range of products specially created to help you manage your family finances. Our budgeting tool allows you to easily track spending, while a family saver account helps you save for the future. Drop into your local branch to talk to us about your options, or call us on 0818 724 725.
Terms and conditions apply. Allied Irish Bank, p.l.c is regulated by the Central Bank of Ireland.