Raising little Savers!

I warned you! This blog is a place where I am going to share my ups and downs; so here it comes more domestic! 🙂

Have you ever thought in introducing budget or financial concept to you children?
Most children’s financial habits are formed by the age of seven, it was claimed today by the government-backed Money Advice Service (MAS), as it urged parents not to “underestimate the effect their own good (and bad) money habits will have on their children”.
The organisation pointed to a Cambridge University study that suggested that most young children had grasped all the main aspects of how money works and formed “core behaviours which they will take into adulthood and which will affect financial decisions they make during the rest of their lives”.
Caroline Rookes, chief executive of the Money Advice Service, said: “This study really demonstrates the power of parental influences, and illustrates how much of what you learn and absorb when you are young, both consciously and subconsciously, affects the choices you make throughout the rest of your life.”
Tracey Bleakley, chief executive of the Personal Finance Education Group, said: “Parents have a key role to play in reinforcing this by talking to their children about money and helping to pass on good financial habits.”

Back to my domestics (ha ha!) I am not an accountant but I know my outgoings, income and how much I should be saving towards a raining day or retirement. I think it is a valuable guidance to start while they are young in a hope that they will follow through in adulthood. 

I wish I had learnt it earlier in life but again I had no guidance whatsoever from my parents…A savings habit is exactly that  – a habit. It takes time and practice to learn how to do it.
My daughter’ weekly allowance is aligned with her school development/ efforts and her behaviour in general. Whereas for my other children it is aligned with their behaviour and house chores i.e keeping their room and wardrobes tidy, feed the dog in the as per schedule and cleaning up after themselves after meals. How to track that? That’s where I fail. Any ideas how to practically “operationalise” it?
If I am being honest I am only diligent towards my teenager’s allowance as it is easier to track (through her studies and behaviour) whereas for my other kids the story is different :-(… maybe it is due to the fact that I have many children… oh dear, that’s a reminder of how crazy I am… crazy for love that is (ha ha!).
So in attempt to give my kids I kick start on savings I wrote to them last year then followed it up with an after meal chat:

Mum and Dad would like to teach you to deal with money wisely and independently to help you in your adult life.Each item in the budget must pay for or set aside is called an expense. Every budget has two types of expenses: fixed expenses and variable expenses.

Fixed expenses occur each week, and the amount of these expenses generally remains constant from week to week. Examples of fixed expenses are:

  • Savings allocation
  • Donations to charity
  • Telephone bill (arising on a monthly basis)
  • Transportation costs (bus fare, gas for the family car)

Variable expenses are the opposite of fixed expenses. These are also referred to as flexible expenses because they aren’t rigid. In some weeks, variable expenses may not even be there. For variable expenses, make an estimate of what they might be.

Even though they may not be the same each month, it’s a good idea to provide a certain amount for them on a regular basis. Then, if they don’t arise in a certain month, that money can be set aside (accruals). These set-asides will accumulate and be used later when the variable expense comes along.

Examples of variable expenses are:

  • Entertainment costs
  • Clothing
  • Gifts for relatives

A budget isn’t carved in marble. It’s something that can be adjusted when needed. In fact, the budget should be completely made over at certain times.

  • When income increases. If you get a bigger allowance, you will have extra money to plan for.
  • When expenses increase. As spending responsibilities are shifted to you, you will have to budget for them accordingly. For example, if you are the one to pay for your mobile bill, then you will have to manage your money by putting these items into your budget. Spending responsibilities typically increase with your age. For example, if you want a special pair of shoes and mum and dad won’t buy it, you will have to adjust your budget to expand your savings so that you can accrue accordingly to be able to buy the pair of shoes yourself.

So my friends I feel I have to review that chat but before I do so I would appreciate your comments and advise on how to monitor and track the expectations set to kids. I dont want to just give them the money for them to feel spoiled or that money is easy and not earned.

This blog should be the perfect place to leave your comments in but I am not good at IT (hands down) and have little time to dedicate to it currently does not have the ‘comment’ functionality :-(. Thus I would appreciate your comments/advise by email: healthyupbringing@gmail.com. I will in return publish the responses and my revised strategy!

Keep breathing,

T xx


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