Financial discipline is one of the most important lessons a parent can impart to their child. Money management as a skill can better be instilled on children from early life and this responsibility squarely lies on parents/guardians to mould their children’s financial future. A child who learns financial prudence early in life will be better prepared for life and the challenges that might come along. Teaching your child financial discipline will cultivate a culture of saving the little they have and be keen on their spending habits. Unprecedented times like the Covid-19 pandemic have been an eye-opener to many parents as they are able to see the importance of saving for their future and more so their children’s future.
Here are a few ways in which you can inculcate financial discipline in your child.
Distinguish needs vs. wants
As a parent, teach your children the difference between needs and wants from early in life. By doing this you would have taught them to spend their money on the most important things in life first. For example, if your children get an allowance, having them write down their purchases each day and add them up at the end of the week can be an eye-opening experience. Encourage them to think about how they are spending and how much faster they could reach their savings goal if they were to change and monitor their spending patterns.
Helping children define a savings goal and how long it would take to achieve that can be a better way to get them motivated. If they know what it is they want to save for, guide them on breaking down their goals into manageable bites. After identifying their goal for saving as a parent you can provide a piggy bank or jar where they could stash their money. If they want to buy a playing station, for example, help them figure out how long it will take to reach that goal and how much they need to purchase it based on their savings rate.
Embrace the work to earn system
According to a survey by the American Institute of Certified Public Accountants (AICPA) 2019, two-thirds of parents said they paid their children an allowance from doing a five-hour chore. If you want your children to become savers, allowing them to earn money provides them with the opportunity to learn how to use it. When you offer allowances in exchange for chores, they are also learning the value of their hard work and that money is earned and not just handed to them. Emphasizing to the children that working is important in order to get what you want, will motivate and nurture good values in them.
Be a good role model
Most children tend to copy what they see their parents doing. A parent should strive to be a role model to their children by setting a common goal for the family and saving for it. For instance, you could also decide to save for something together, such as a big-screen TV or a family vacation, which will see that each person of the family works towards making this goal turn into reality. You could also share with your children what you do with your savings to emphasize on its importance.
Open a Mdosi Junior Account for your child
Teaching your child the importance of saving the little they have goes a long way. Family Bank has an ideal savings account for your child. Mdosi Junior Account is designed for children below the age of 12 years and is operated by a parent or guardian. It is an account that is in line with the aspirations that many parents have for their children. Visit any Family Bank branch near you or reach out to them through https://familybank.co.ke/ to make your child’s dream come true.