There are so many important lessons your children need to learn. So, it is not really surprising that some of them get pushed down the list. Often, one of them is teaching your children about money, in particular, how to save and prepare for their long-term future. So, today, I thought I would share with you some easy ways to do this.
Open an ISA for your child
If you have not already done so, it is worth investigating open a Junior ISA for each of your children. The stocks and shares ISA from Wealthify is an interesting one. It provides an easy way to diversify the way you save for when your child is 18. If you want to, you can also open cash ISAs for your children. The amount the government enables you to put into Junior ISAs can be divided as you wish between the two types of accounts.
The tax break is the main reason a lot of parents open Junior ISAs. But, the fact that the money cannot be touched until the child is 18 is also a good thing. It completely removes the temptation for you to dip into their savings.
You cannot do so even when a family emergency occurs. Telling your children about the ISA, when they are younger, demonstrate to them the importance of looking ahead and being financially prepared. There is no better way to show your children how the interest can build up, when you save in the right way. It is a lesson that they will never forget which will encourage them to become regular savers as adults.
Teach your children about compound interest
It is also worth watching this video and using what you learn there to teach your child about the power of compound interest. Another approach that works really well, is putting some money into a child´s piggy bank that is not to be touched for a year. Every month, tip the cash out with your child and add between 5 and 10% to what is in there. They will be amazed by how quickly the amount that is in the piggy bank builds up.
Encourage your child to save a % of the money they receive
Try to get your children into the habit of putting aside at least 10% of any money that they receive. This teaches them the self-control they need to be able to become regular savers.
Initially, the cash that they save can be put into a piggy bank. Ideally, a transparent one that will enable them to see the progress they are making.
Open a bank account for your child
Later, that cash can be put into a bank account that your child has control of. If you can, open one that includes some sort of budgeting app. This will teach your child to keep track of what they spend and encourage them to look ahead and map out where their money goes.
Disclaimer: This post was written by a guest author as part of a collaboration with Wealthify.