1. Discuss needs vs wants
It’s important to start by helping your child understand the difference between needs and wants. Explain to your child that needs include basics such as food, water and shelter. Then go on to explain that wants are all the extras on top of that – going to the cinema, buying a new smartphone, getting a new bike.
You can help them by going through items in your house and asking if it’s something the family need or want. This activity will help them to understand the difference between the two and get an idea of which items need to be prioritised over others.
We’ve already written an article on talking about needs and wants, which gives you some handy activities to help your child wrap their head around it all.
2. Let them choose a savings goal
To help your child understand the idea of saving, it can help to set a savings goal for something they really want. If they know what they want to save for, you can help them to break their goal into bite-sized chunks, which will motivate them to stay focused along the way.
For example, if they want to save for a new £40 pair of trainers, help them to understand how long it would take to reach that total if they saved a certain amount each week. This will give them something to aim for and help them to understand the whole point of saving.
3. Introduce pocket money
If you want your child to become a savvy-saver, allowing them to earn and save pocket money is a great way for them to learn how to use it. You could start by giving pocket money in exchange for chores and help around the house so that your child learns about the value of their hard work.
When you hand the pocket money over, you can then talk to them about why they’ve earned it and what it can be used for. This is where you can encourage your child to set aside a certain amount each week to work towards their larger savings goal. Your child will learn how to save for the item they want and over time they will build good money-saving habits that they can use throughout the rest of their lives.