1. Give Him Something to Save!
At ages 5 to 7, your child is not engaging in activities that yield income for him. However, parents, extended family members, and others make cash gifts to the child. This should be the source of his savings for the moment (Read: How to Make Your Child a Millionaire by Age 15).
2. Let Him Have Freedom of Choice
Give him freedom in making decisions concerning his savings project. How much he wants to save and how frequently should be his choice, with guidance provided by you, of course. The guidance also entails educating the child properly regarding the savings culture. Help him answer the following questions:
(a) Why are you saving?
(b) What are the different reasons for saving?
(c) What is your goal for this savings?
(d) Is savings the end game? That is, will you just save and that’s that? Are there other things you can do with your savings to help it grow?
3. Provide the Means of Saving
Give your child a convenient and accessible means of savings. Opening a bank account might be cool and confer a certain level of seriousness to the objective, but can a bank be easily accessed by the child? If the child has to have your help each time he wants to make a deposit then the freedom part of the learning process would have been defeated. At the early stage of the savings project a piggy bank or a DIY wooden box can suffice.
4. Don’t let it Become Boring
You can find ways and means of rekindling the fire from time to time to prevent apathy and boredom. Let your child see his savings increasing. At the end of a given period, savings can be transferred to an investment bank such as Cowrywise to yield higher profits. Some can also be used to invest in livestock which he can see growing and multiplying and being sold for a profit.
5. Let There be a Reward at Some Point
Your child should be able to tell firsthand how useful a savings habit is by making use of some of the savings for something he wants or needs. He may want a cute puppy, or he may want a certain watch or phone. He can be allowed to use part of his savings to meet this need which will give him a sense of achievement.
In Summary
It is never too early to set your child on the path of financial discipline. You can teach him to save and invest to enable him have financial freedom in the future.
Are there other ways a child can learn to save and invest? Increase our knowledge by making your suggestions in the comments.