Lessons on wise ways to handle money are key to their financial future.
Many key parents build a nest egg for their children to help education costs or to be put towards their first home. While that will give them a great head start, it's not enough on its own. Parents must invest time in teaching kids about money and how to develop solid savings habit.
Start them off early
The earlier you start, the better. When kids reach pre-school age, begin by explaining what money is and start to show them the various shapes and sizes of coins. Tell them how you get the money and it's used to buy. Kids learn the most about money from observing their parents. So try to set a good example for your children.
Pocket money years
Pocket money is a vital way of teaching your children good financial habits. It's their first taste of managing an income and it will help develop the skills they'll need later in order to live on a regular wage as an adult. My husband and I started paying our kids pocket money when they started school, about 5 years of age. We used to have a deal of paying the kids in return for a little household jobs -- like fixing their bed or as simple as matching the family's clean socks. It's good to get kids used to the idea of working for pay early on.
In the Piggy Bank
Children can start saving as they begin receiving pocket money. Sit down and explain to them what saving means. Ask them what they'd like to save for and help them reach their goal. Get younger kids a piggy bank and put a picture of their goal on it as an incentive. Ensure it's something achievable so they'll maintain their interest.
Open an account
After your child gets the hang of saving, it's time to open a savings account. We were able to get our kids a "Junior Savings Account" at BDO. The bank offers discounts and freebies to certain establishments.
Inspired to invest
When your kids are in high school, give them the financial freedom, particularly if they get a part-time job. Discuss setting financial goals and regular saving. Explain the basics of investing and growing their money by earning returns on their returns.