Here at Money Moppets, our passion is to help parents teach their kids about money so that they can be confident with money as they develop into adults.  For those parents who are confident with money many see the value of teaching their kids and may just need a little help on how to approach it. Those that aren't confident may feel a little daunted.  If this is you don't worry, we are here to help and if you have any specific questions, comment on this blog post and we will do our best to give you some helpful tips.

One way to test your confidence is by how you approach saving money. Most of us know that saving money is an important part of life if you want to have a comfortable living. Whether you want a car, a house, a holiday, or the latest toy, saving up is key. It is not surprising that many people struggle with saving and end up giving up without reaching their goals.  However, there are some that nail it. So, are you a confident money saver?  Test yourself by reading below the 5 common habits confident money savers exercise.
 
1. Know What You a Saving For?
 
“A goal without a plan is just a wish”.  This saying couldn't be truer when it comes to saving money! The first step to success is to identify what you’re saving for. Is it a trip to Paris? A deposit on a house? Money for your child's education? Knowing what it is you want and having a clear goal will help you to stay on track. Have a picture of your goal front and centre so you will see it everyday to give you that extra motivation. Without an end goal in mind, it’s easier to stray from the saving path and spend money impulsively because – why not?
 
2. Know When You Need It By?
 
Now that you know what you are saving for, it's time to determine how long you have to save it.  This time period could be set for you like when your child reaches school age or a timeframe you create yourself. If you are choosing the timeframe yourself, set a realistic but also a challenging goal. If you give yourself too much time, there won’t be enough pressure to motivate you and you will be less likely to stick to your plan. If you don't give yourself enough time, the goal seems unattainable and you will likely give up.
 
3. Have a Savings Plan
 
Once you know your savings goal and your timeframe, take a good look at your financial situation and how you've been spending and saving your money. Determine how you can improve your budget, where you can save money or get a better deal, where you can cut back and what ‘needs’ are you spending money on that are really just ‘wants’. Saving money can mean big changes, like moving house or getting a new job.  In most cases though it means small adjustments to your lifestyle like bringing your lunch from home rather than buying it at work. You might also want to think about how your savings can work harder for you, either in the form of a high interest savings account or investing in shares. All successful savers work out a plan to reach their savings goal, and stick to it.
 
4. Tell Others Your Plan
 
Your family and friends can be a great support in helping you achieve your savings goals. It’s psychologically proven that sharing your goals helps you to attain them, by adding the pressure of making yourself accountable to your peers. You can make your goals feel more 'real' by sharing them. Your social group can cheer you on, offer advice and show their disappointment when you’re falling behind. 
 
5. Review Your Progress - Regularly! 
 
Set regular milestones along your savings timeline, either weekly or monthly, and focus on reaching those goals. If those milestones are big achievements, think of doing something to reward yourself. Keep track of the goals you have reached and how you are progressing. Many banks have savings tools and calculators specifically for this purpose.
 
So how did you go?  Do you practice these habits?

As part of my job, working at a bank, we have been interviewing customers on their money management habits.  We have specifically targeted customers between 20-35 years old as this is typically when they are starting to make larger financial decisions beyond savings and spending, like thinking of purchasing a property.

Whilst there are all different types of money management techniques people use, one thing came across strongly, that is there are those that are competent at money management and those that are not.  Those that are competent know what it means to save, have ways of saving, have typically reached savings goals in the past and feel in control of their financial situation.  Those that are not so competent tend to live from pay day to pay day, know they want to save for something but don't know where to begin and overall felt they were not in control and could be better using their money.

The key takeaway that I found most insightful though was that the ones that were competent money managers said this was taught to them by their parents.  Their parents taught them what money was, what it meant to earn money and save it and sometimes how to invest.  One customer quite clearly remembers having instilled in him "a penny earned is a penny saved".

Being a parent who wants to teach my children about money, this provided further validation as to why it is worth the time to teach them when they are young.

According to Wikipedia the definition of money is “any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context, or is easily converted to such a form.” This is a bit of a mouthful for my 5 year old so the question is what is money?

Well, simply money is something you earn through exchanging something of value (e.g. your expertise, your time, something you make, produce or sell) and you give up for something you want. How much money you earn or give up is determined by what someone else is willing to pay.  If you have a play shop or cash register at home I find this is an easy and fun way to show your child how it works.  Give them some real coins or play ones, label a few of their toys with prices (numbers) and ask them to buy the toys they want with the money they have.  They’ll soon see they cannot afford everything and will have to make choices about what they really want for the money – less things of higher value or lots of things for smaller values.  It is also is a great way to practice math!

Last week, when my daughter asked for the latest Barbie campervan my comment was ‘I can’t afford it, I’ll keep it in my mind for your birthday”, the usual response is “ok mummy” but this time I was confronted with, “just put in on the card”.  When lots of purchases are now made electronically through credit or debit cards or electronic transfers, the simple act of counting how much money you have and taking it to the store is not always practical. 

​Having a bank account or a virtual piggy bank for your child is one way to show when something is bought with a card or electronically the value in this account is decreased brings back some connection between the physical and electronic. ATMs are a classic example, many children believe money comes from a machine in the wall.  Understanding where money comes from and how it is earnt is definitely something to explain to children at a young age.