Savings coaching without tight goals rings hollow to children

When there is no goal, children will be quick to use the coins to buy sweets. FILE

By Isaiah Opiyo

IN SUMMARY
Window shopping will help young people be sensitive to prices.


At the start of every year, I usually ask my niece, who is now 10 years old, what she would want as a gift the next festive season. After making her pick, we walk to the shops to confirm the prices.

During the window shopping, we compare prices and I tell her why it is important to settle for affordability. Based on the price of the selected item, I ask to save for the target and promise to double the amount.

I also promise to give her coins to save in her piggy bank or money box until the year ends. As part of the rule, the money is accessible only once a year and only during the festive season when people buy thing as part of the celebrations.

Keen on prices

In 2013, she was saving to buy a Sh700 pair of shoes for a season’s gift, but she had accumulated Sh450. Not a bad run, I told her.

Remember I had promised to double her savings. I kept my word and at the end of the day, we had Sh1,350 to buy the item and others.

During the shopping, I realised she was keen on the prices, perhaps to save a few coins from what she had accumulated. Encouraging, what is not?

Her appetite for savings is now sharper and the young girl is focusing on more savings and a bigger gift the next festive season.

I am sharing this experience in this column to emphasise the role of teaching children on the culture of saving and spending during the festive season.

Many times, I have been asked by many parents whether it is healthy to give children money to spend especially during the festive seasons. It is not bad, I tell them. But they should be taught how to save so they can understand why they need to be careful when buying things.

Many parents have tried in vain to instill in their children the culture of savings by giving them coins to save in their piggy banks — only for the little ones to buy sweets or candy.

This failure or the reckless spending on sweets by children is as a result of unclear target or financial goal. Without a financial goal, saving becomes difficult since there is no drive or motivation.

Therefore, to boost their morale to save, children should be guided on how to choose a financial goal that drives saving. This financial goal should be in form of a valuable, perhaps a gift that stirs excitement.

The cost of the item should be within reach and affordable in relation to age.

For children below 10 years, the cost of the item should be within Sh1,000 so they would find their goal realistic. It is important to note that the price of the item should be realistic to the amount of coins that you give the child to save each day.

Before settling on the price of the item to buy, take the child for window shopping for impact and to compare prices. Let them choose and note the prices.

As he grows up, the child will begin to be sensitive to prices when shopping. Next, set the time frame for saving. For instance, if it is a birthday gift, tell the child the saving period covers a whole year.

As he sets up the piggy bank, the parent or guardian should also reveal a saving plan or target, say to buy a plot or a car. Let the young one know it is through saving that one can accumulate a significant amount to buy something of value.

Finally, help the child to wait until the period is fully covered to reduce the temptation to make any reckless or impulse spending.

Piggy bank

You can offer to triple the amount she accumulates over the period as a reward for financial-goal discipline. When the piggy bank is eventually opened, you can share your achievement of the financial goal set.

Once you open the piggy bank, make sure you first buy the item identified at the beginning of the project. This calls for celebration.

Make this an annual ritual to teach children the culture of saving or to meet certain goals like shopping during the festive season.

Mr Opiyo is training manager and coach with Tolerance Employee Financial Advisors. Email: isaiah.opiyo@toleranceadvisors.com