Leaving a legacy of a savings culture is not only something we owe our children, but is also something we need to teach them to do. While children do absorb a significant amount of information from a very young age, it is more likely that the example set by parents around budgeting, saving and financial planning will resonate with young ones over a longer period of time. Take the opportunity of National Savings Month this July to not only educate yourself and your children about this important topic, but also ensure that you make your children part of the learning process. Consider a few good reasons to start saving.
- When you have money, you can call the shots! When you owe money, someone else does!
- Financial ‘shocks’ are easier to deal with if you have emergency savings stacked away.
- An early start to a savings plan will provide peace of mind that your child will receive a good education and that you will be able to enjoy a sustainable retirement one day.
It is also important to decide what you want to save towards. Categorise your savings goals into long, medium and short-term goals. Savings money intended for retirement is typically a long-term goal, while a hild’s education could be a medium term goal. Getting together an emergency fund for unexpected expenses could be one of your shorter term savings goals.
How much you should be saving will differ from person to person and the goals you set for yourself. Be realistic – know that it will take time! The process of accumulating enough money to reach your financial goals does not happen overnight – it is a journey.
A journey starts with taking the first step
The best place to start is with a detailed monthly budget drawn up to set out income and expenses. Once you know what you are spending your money on, you might be surprised to find that there are some adjustments that you can make to start saving towards your goals.
The next step is to start by paying yourself first and commit to what it is you want to achieve over time. Plan ahead by budgeting to save, before the bills arrive and the ‘specials’ are advertised. Involving your whole family in the process can help instil healthy financial habits in your children by teaching them the basic principles of budgeting, saving and financial planning.
Make it fun by setting even shorter term goals to treat the family at regular intervals while sticking to your longer term plans.