Introduction
What do you understand by the term 'saving'?


INFORMATION: Saving Account - Basics


Saving can be defined as putting aside a planned amount of income each month (or week). Why is it a good idea to save? Firstly, it enables you to buy things that cost more than your budget would allow in a single income period. Beyond that, saving is also a way to plan for the future. In life, you will sometimes face unexpected expenditure. Having savings means you will cope better at these times.



'Investing' is a form of saving in which you take a small, planned part of your income and use it to buy something, or put it into a business, with the goal of making more money. When the property increases in value, so does your investment. When the business makes money, so do you.

Keeping your savings in a bank will earn you a small amount of interest. Investing wisely can make your money increase much more quickly. However investing carries risks. If you invest poorly, you could possibly lose some or all of your money. In some investments, your money is unavailable for a period of time. The best advice is to save first and only invest some of your savings.

Application
What are the best ways to teach our children practical lessons about saving?

The subject doesn't normally hold the same appeal for them as for example, spending! Nevertheless there are ways to help them establish good habits.

1: Give your children a savings goal as soon as possible. At first it is important to make the goals small - they need to see the rewards of saving before they get impatient.

2: When they meet their savings goal, don't waste any time in going with your children to make the purchase. (But remember to follow the 'wise-buying' guidelines)

3: When your children are putting their savings in the bank, you can teach them about interest. Clearly the child's age and ability will influence the amount of detail, but there should be an opportunity to illustrate the way in which compound interest will help their savings to grow.

4: Lastly, remind your children that all savings need to be flexible. We may start saving for a particular reason, only for circumstances to change and with them, our saving priorities.

Remember to check out the 'Kids Zone' for some ideas of making the subject fun for your children.