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Ask the Expert: How can I encourage my child to start saving money?

Make all money activity fun. Encourage your child to enjoy playing with money and play money games
Make all money activity fun. Encourage your child to enjoy playing with money and play money games Make all money activity fun. Encourage your child to enjoy playing with money and play money games

Q: How can I persuade my four-year-old son that saving some of the money he gets from birthdays and Christmas is a good idea?

A: Secret Millionaire Gill Fielding, a financial expert who founded the charity Money Mum and is the author of a new book Solving the Financial Success Puzzle, says: "All young children start off liking money: the shape, the feel, the brightness – after all it's just like treasure – so the best way to engage them with money is to keep that magic alive as long as you can.

"Encourage your children to play with money – to hide it, count it; and if they do want to spend it, encourage them to spend it with a flourish and a purpose. What that does is to encourage the child to think about the spending and how to do it, and in the main the more they think about it, the less they'll do it.

"When you make the spending a really significant thing, it stops the outflow of money being a casual exercise. What this also does is to encourage the child to enjoy the money, and that's a really positive feeling. Too many people feel negative or bad about money and long term that doesn't help any child create wealth.

"Encourage your child to understand that money will grow if it's properly 'planted'. Put some money in a savings pot for them and then pay them notional interest (at a reasonably high rate) on their savings each week or each month – and again pay that interest purposefully and with a flourish. Make it into a game, see if they can guess how much interest they'll get each week, and of course the interest will be growing as their pot of cash gets larger.

"That should encourage most children to save. In our family, we had a 50/50 rule that any birthday money or larger sums were split 50 per cent into savings and 50 per cent into spending.

"Make all money activity fun. Encourage your child to enjoy playing with money and play money games (there's a reason Monopoly remains a favourite game even today – children like playing with money). Make money flows in and out purposeful – encourage them to think about what they're doing.

"If they spend all their money, play a 'what if' game, saying, 'If you hadn't spent that money, it would now be worth more', and show them how much it could have been with added interest.

"Finally, ensure your child feels OK about money: it isn't dirty or bad, and it allows them to have better and more flexible choices."