It is important to teach children how to save in order to give them a solid financial foundation Photo Pexels
South Africa – In today’s fast-paced and consumer-driven world, it is crucial to instil in children the importance of saving and budgeting from an early age. By developing a culture of financial planning, we can empower our little ones to become financially independent individuals in the future. July is National Savings Month in South Africa, and it serves as an opportune time to highlight the significance of saving and budgeting.
National Savings Month is an annual initiative that was initiated in 2001 by the South African Savings Institute, a non-profit organisation. Its primary goal is to create awareness about the importance of long-term savings and investing. Al Baraka Bank, as a member of the Banking Association of South Africa (BASA), actively promotes savings programs in schools through media releases, radio interviews, and social media campaigns, explained Attiya Docrat, Investment Consultant at Al Baraka Bank SA.
Promoting savings among children
Teaching children about saving is best done by starting early. Al Baraka Bank understands this and to achieve this, they visit schools and engage with learners to emphasise the significance of saving. During these visits, students are encouraged to create budgets for their monthly allowances, helping them understand the concept of managing their finances.
“The learner that receives a monthly allowance starts the practice of drawing up a budget. He or she then sees they have an x amount left. This could be placed into an investment where the amount earns a profit. Therefore, we encourage this practice to be implemented from a young age so that the culture of savings becomes a way of life making the child financially independent.”
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Encouraging financial responsibility
Al-Baraka Bank has developed specific products to cater to the youth market. They offer two distinct options: the Monthly Investment Plan and the iStart Transactional Banking Account. The Monthly Investment Plan allows individuals to invest a minimum of R100, with subsequent monthly deposits of R100 and more. On the other hand, the iStart Transactional Banking Account serves as an everyday banking account for the youth.
Parents play a crucial role in guiding their children towards financial responsibility. What tends to happen, according to Docrat, is parents open up an account for their children and it then gives them the chance to educate their children on savings before handing the account over to them. This process fosters trust between parents and children while empowering the younger generation to make informed financial decisions.
“A lot of our clients. The parent opens up the account and after a while, as the children learn more and more about financial independence, they take over the account. A lot of parents develop that trust in their child and they hand it over. Parents also have the opportunity to teach their child how to manage their wealth and money from a young age, which is very important.”
Essential steps for saving
Before one can put money into an account or even start saving it, they need to make sure they don’t spend it all. To avoid losing it all, Docrat imparted some of her knowledge on essential tips for saving and making your money last longer.
“Don’t become an impulsive spender. In other words, we really need to resist sales as much as we can. We see 50% thinking we are benefiting but also, we need to ask ourselves if we actually need their product. If we don’t, we’re actually just digging deep into our pockets unnecessarily. Also prepare a budget for your requirements every month. As difficult as it may be, stick to that budget. Don’t be trapped by easy credit, especially using credit cards. It’s important that we remember in the back of our heads every time that we need to live according to one’s means.”
Living within one’s means is especially difficult in these times. With social media, everyone’s lives are there for all to see and we must, especially the youth, resist the temptation to compare lifestyles with others.
Another important thing, especially for the youth, is to set a goal and work towards it. Parents are always ready to give their children what they want but it is crucial to let your children save and buy what they want with their own money.
“As parents, out of love, we willingly give our kids whatever they want. However, I would advise to teach them how to save or work for what they want. This will teach them not only the value of money but also the importance of hard work as well to appreciate the value of things. Instead of things just being given to them, let them work for it. They will really appreciate it much more.”
Parents should also look at investing in long-term options, such as unit trusts, to secure a stable financial future, particularly with rising education costs and the increasing expenses of daily life.
“We encourage you to start investing in your child’s future. Invest in a unit trust for medium to long term. Life in general is more and more expensive. Every day we are realising it so I would request if you haven’t, start now. Start today.”
In a society driven by consumerism, it is essential to instil a culture of saving and budgeting from a young age. By educating your children, helping them to understand the value of saving, budgeting, and investing, it can build a solid financial foundation that will serve them well throughout their lives.
