For most of us, spending is easier than saving. But, getting into the habit of saving from a young age can lead to a lifetime of financial independence.
With kids learning about money in primary school, understanding how to save and spend is a lesson well learned.
So, what can you do to help your kids develop a healthy relationship with money - and understand the difference between instant and delayed gratification?
1. Make a habit of saving
It might sound obvious, but if your child is trying to save, they need to cut back on their spending. Children may struggle with saving all their pocket money, but it can be helpful to get into the habit of putting a little aside each week. Getting used to saving at least some of their pocket money is productive in several ways; it enables kids to develop a habit of saving, and it teaches discipline and delayed gratification.
Children learn about money and its value in school, from as young as five. Once they are old enough to understand the value of money, they are old enough to know how it is used. When they are younger, saving goals will probably be limited to saving for a new book or a small toy. Even these short-term saving habits will help build financial literacy.
As they grow older, your children might be saving over a longer-term. Be it a couple of weeks or months; you are still instilling a sense of financial independence.
2. Set up saving goals
Encourage your children to set up saving goals. If they are saving for something in particular, for example, a games console, you can help them establish a savings plan. Work out how much money they have to start with, then what they need to save to reach the total. Agree on a time scale, and encourage them to be realistic about their goal. Saving for something high value is not going to be achieved in weeks, it could take months before they reach the set total. Understanding that saving takes time can be a challenge, but it is a lesson well learned.
If possible, agree to match or support their savings, or add a little bit of interest as their money grows, to give them a boost towards their goal. Incentives can be very persuasive.
3. Visually track savings progress
Seeing is believing. Having a visual perception of savings progress inspires your kids to keep saving.
With GoHenry, your child can set up a savings goal within the app. Based on the amount of pocket money your child receives and their end goal date, GoHenry will work out how much they need to save each week. This amount will then be automatically transferred from their spending account each week.
You could also make a chart and stick it on a bedroom wall or the fridge. Let them tick off and date each little chunk of money as it is put away. That way, if the saving slows down, they can see clearly when this happened. It might give them the push to start again.
4. Keep money safe on an app like GoHenry
More parents are opting to give children pocket money via apps such as GoHenry, rather than handing out cash that can easily go missing. If your child has a GoHenry prepaid debit card, you can set up a weekly pocket money transfer to their account. Both you and your child can see exactly how much they have saved, right down to the last penny.
5. Earn pocket money from doing chores
Not all children get pocket money, but quite a lot do. Some parents choose to reward children for doing chores around the house.
According to The GoHenry Youth Economy Report, the UK’s top tasks completed by young earners are (plus a guide to the going rate):
- Tidy room - £1.03
- Brush teeth - £0.70
- Make bed - £0.81
- Homework - £1.18
- Get ready for school - £0.71
- Load/empty the dishwasher - £0.88
- Feed pets - £0.88
- Vacuuming - £1.20
- Put clothes away - £0.70
- Empty bins/recycling - £0.76
Remember, this is only a guide and it’s not how much you give that’s important, but the fact that you pay regular pocket money.
Tasks that your child can complete will also vary by age - older children could perhaps help with ironing or cooking, and younger children can lend a hand with hoovering or dusting.
Some parents opt to give payment by chore, and others prefer paying a set amount in reward for the completion of a set of tasks.
Others create a list of jobs, some of which are done without reward and some which are rewarded with pocket money.
6. Keep track of what you spend with spending notifications
If your child has access to a prepaid debit card like GoHenry, you can keep track of what they spend using the app.
Pocket money apps like GoHenry have become an increasingly popular way for parents to 'pay' children’s allowance. Children and parents can keep track of available funds and see where and when money is spent. Parents can also determine where money can be spent and stop the card from being used in certain places.
With GoHenry, you can see where children spend their money with instant notifications. Equally, children can see their savings grow. Keeping track of what has been earned, spent and saved is an important habit, enabling children to learn how to keep on top of their money from a young age.
Saving is a great habit to get into, whether you stash your money in a piggy bank, wallet or online money app. Familiarising children with an understanding that we have to earn and save before we can spend is a valuable gift to give.