When it comes to saving money, GBTI understands that people are much more likely to develop positive, lifelong savings habits if they start at an early age. This is why GBTI created the Early Savers Club , a program that offers special benefits, such as premium interest rates and gift vouchers, to young savers . Open to children from birth up to the age of 17, the Early Savers Club helps parents and families all over Guyana prepare financially for their children’s education and other future needs, and teach their children about the importance of financial literacy and good savings habits.
Beyond programs like the Early Savers Club, there are all kinds of simple things parents can do at home to help children become responsible savers. Read on for a look at six ways you can encourage your kids to build good savings habits.
Start the conversation.
Not many parents involve their kids in regular discussions about money, but starting this conversation is one of the most important things you can do to teach your kids the importance of financial planning and saving. Talk to your kids about the basic financial choices you make every day, such as which groceries to buy, and include them in discussions about where to spend and where to save. Understanding that money is an important part of daily life is a critical first step in helping kids grasp more complicated ideas like budgeting and saving.
Make sure they have their own money.
Saving money is a habit that requires practice. In other words, to learn about saving through experience, rather than just through conversation, kids need to be in control of their own money. For some families, this might mean giving kids a regular allowance. Some parents give children an allowance for completing daily household chores, while others encourage kids to earn their own small income through simple jobs outside the home, like helping a neighbor. Whichever option works best for your family, allowing your kids to have their own money is an essential part of building a healthy sense of financial responsibility.
Link savings to a goal.
For most children (and many adults!), it can be hard to truly grasp the importance of saving without a specific goal in mind. To get your kids motivated to save, it’s helpful to have them define a savings goal that they can then work towards. For example, if there’s a particular toy or game that they would like, help them figure out how much it costs, how much money they have right now, and how much more they need to save before they’re able to buy it. Then, you can take the exercise one step further and help them to develop a savings plan: if they need to save GY$10,000 for a toy and their allowance is currently GY$1,000 per week, for instance, help them calculate how long it will take them to meet their goal depending on how much money they save on a weekly basis.
Help them track their spending.
The flip side of saving is spending, and a big part of being a better saver is tracking your spending in order to understand where your money is going. To continue with the example mentioned above, if your kids want to save GY$10,000 for a toy but they find that it’s taking them a long time, get them to write down all the other things they spent money on that week. They may find that the reason why their savings are building up so slowly is because they always buy a snack after school. If something like this is the case, you can work with them to help them understand how changing their spending habits will allow them to reach their savings goal faster.
Incentivize saving.
If your kids don’t seem motivated to save, why not try offering them a financial incentive? For example, if your kids have set a significant savings goal, you could match a percentage of what they save dollar-for-dollar. For every dollar they save, you could contribute 10 cents, or you could offer a one-time financial bonus, such as an extra GY$5,000, when they reach the halfway point of their goal. Incentives like this can greatly boost the appeal of saving rather than spending—after all, it’s essentially like being paid to save your money. Incentives also help your kids learn about the value of matching contribution programs that they might be able to take advantage of later in life, such as employer matches for retirement plans.
Lead by example.
One of the best ways to encourage your children to become lifelong savers is to develop good savings habits yourself. If you haven’t already done so, open your own savings account, start making or increase your contributions to a retirement plan, or build an emergency fund. Then, talk to your kids about what you’re doing. This helps make saving a family activity, and it shows your kids that you truly believe in the importance of the savings lessons you’re trying to teach them.