To get children into a savings culture at an early age, Standard Bank Namibia wil launched the Digi Youth Account yesterday. This is a savings account targeted at existing and potential customers’ children aged 0- 18 years old.
As a rule of thumb, pocket money children can be divided in three ways: a portion to spend now, a portion to save for something in the future, and a portion to giveaway to charity. Below are some tips on saving especially for the young ones
Teach the basics of budgeting. Spending one’s own money teaches a child about the value of money. Saving is about delayed gratification, and giving to charity is about caring and being generous to others. From about 10 years of age you can teach children about investing which is about being financially responsible, having big-picture thinking, planning and fulfilling one’s dreams.
Opening savings accounts for your children to teach them how money grows as interest is earned. Opening a savings account is most effective if even as early right from birth. For a child this is growing up is a very exciting milestone – just about as exciting as losing the first tooth!
Encourage them to set goals. This is an important lesson in the financial management game. If your child wants an expensive toy, provide him or her with a drawing of the item or a “money tree”. As they save, they get to colour in a portion of the picture until it is complete. Then it’s shopping time!
Offer to match savings. Offer your child a contribution of N$1.00 for every N$1.00 he or she saves. As they grow older and earn money from a part time job, this contribution level can be reduced. If a child is small, he or she can undertake small jobs in return for a set payment for each task.
The link is then created that work results in reward. Pocket money is therefore “earned” instead of being just given.
Set up a rewards programme. Adults get rewards for financial transactions, so why shouldn’t children? Encourage savings and when targets are achieved offer a reward in the form of an agreed treat or outing.
Set an example. Do as I do! Don’t do as I say! Lead by example. Set up your own “savings jar or money box” for small change and keep it where it can be seen. Tell your children you are also saving and use the proceeds to buy something small you need at home. (Compiled by: Standard Bank Namibia’s Manager of Liabilities Erna Kaura)