Today’s children are the future citizens of our nation. With the economic uncertainties and recessions bound to recur after periods of time in stages, it becomes necessary to inculcate in them a useful habit of saving money. After all, most children grow up emulating their parents and other people with whom they are closely associated.
Here are some ways in which we can teach our children to save money and learn about Contrarian Investing:
- It is you first that must develop the habit of saving money. Show your child how you economized on a certain item and how that could help in contributing to saving money. Once he realizes its importance, he will develop the habit slowly.
- Read aloud stories related to money-saving. You can also conjure up your own tale and relate it to him.
- At home, always switch off electrical appliances when not in use; especially in the presence of your child whenever possible. It will set him a good example and he will always try to follow suit.
- Gift your child an attractive piggy bank. Start with giving him a monthly allowance. If he has already started reading and writing and knows simple mathematics, ask him to maintain an accounts diary of credits and debits. Now tell him to enter details of his monthly allowance as a credit entry.
- Tell your child to purchase miscellaneous items he requires from the allowance he has received. Ask him to enter these items as debit entries. He should be taught to close his account everyday. (Allowance Received minus Amount for Items Purchased = Closing Balance). The next closing balance will read as: Previous Day’s Closing Balance minus Amount for Items Purchased= Closing balance.
- If he is frugal by nature, there will not be many transactions and his diary will more or less show balances near about the allowance amount. This is a good sign depicting the basic prudent nature of your child. But if the allowance tends to bottom out most of the times, it means that you have to keep a check on the items he spends. You could also tell him that the more he purchases for items from his piggy bank, the lesser will be his balance money and finally, a time could come, when he may have no balance at all and that should never happen, because it would mean a zero balance! And, as his monthly allowance is due the next month, he would have to do without any sort of purchases till that time. Also, you could announce a bonus amount that you would give him, if he did not touch his allowance at all, for three months at a stretch. With the total amount that he would accumulate, you could promise to purchase a useful item for him, for which you would plough in the margin money. Rest assured he will learn the art of saving in this way.
- There may be a point wherein he requires money, but there is insufficient balance in his account. You could introduce the concept of loaning to him, by offering him an amount that he may borrow, with the promise of returning it at a stipulated period of time and with interest on the borrowed amount. Gently inform him about the basic principles of loan without unduly taxing his brain.
- Advise him to use the stairs instead of elevators, whereby electricity will be saved and the exercise will do him good. ‘Walking to the nearby store (or cycling there) and enabling the body to get its due exercise is better than spending money on petrol or diesel on which the car runs.’ This sound advice will work wonders with him.
- Guiding him about the healthy way to eat food and also about exercising daily and that maintaining a healthy body will reduce visits to the doctor will soon see your child shy away from unhealthy snacks and oily food. It will save money that would otherwise have been used for unnecessary munchies and aerated soft drinks.
- Instill in your child the habit of filling his plate with only the required quantity of food and also of pouring only requisite amount of water or juices in his glass. He should be taught not to waste food and water. Also, the art of comparing prices in various stores before purchasing any item in order to benefit from the sale must be taught to him.
- Ensure that he understands that when he prepares gifts at home, the cost incurred is much less than when the same item is purchased in stores. Also, there is the additional pleasure of getting admired for the work, self-appreciation, plus his ‘personal touch’, for which his friend will surely thank him!
- Open a bank savings account for your child when he understands the real world. Start with a child account and ask him to accompany you whenever you do any transactions in his account. Slowly and surely, he will grasp the technique and with it, the art of saving!
Start saving for your kids now. It’s never too early to save for your children. When my son was born, I started a kids savings account for him with Ing Direct. I highly recommend starting to save for your kid’s future with Ing Direct.