Financial Planning For Children

The earlier you start to save and invest, the easier it is to achieve financial security for you and your children.

Whether you are investing for your child's education, or teaching him or her about the value of saving, it is essential that you start. Starting a savings plan for your children is a great way to teach them about financial planning through practical experience. At school our children learn advanced mathematics but are rarely get the practice they need on how to save, budget or invest. So this means that it is the job of parents to make our kids responsible about money. So how does one go about it?

• Start by making saving fun
• Set goals and incentives in place for helping them meet these goals. For example: All money saved by the 1 of December of each year you will match
• If your child desperately wants something - let him save for it. Parents should set the example i.e. include your children in the planning and saving process that you go through for home improvements or holidays and explain the difference between month-to-month budgeting and saving for planned and unplanned events.
• Teach children to budget.
• Open a bank account.
• Start depositing money received by your children for birthdays and other special occasions, pocket money, money earned for chores etc. This is a good way to get a bank account up and running. Insist that half of any money received must be saved.
• Dig out an old-fashioned 'piggy bank', as my Gran refers to it. Preferably one made of clear plastic, which will ensure that children see their hard cash building up inside. This brings across the concept of money 'growing'. (And - no I.O.U.'s - Mom and Dad)
• Take your child to the bank regularly to deposit the money into his saving account - develop that culture of saving.

Such a savings plan is good for children as it involves making small and regular investments. Whatever investment goal you and your child decide on, regular investing will teach him or her commitment and restraint and show them first-hand how to reach their goals. Saving skills are needed at every stage of a person's life. Your children must learn the skills to save and invest.

Teaching wealth creation as a skill is up to us as parents - up to you, Mom and Dad.

Remember - your children are watching you!