Teaching children to save money is by no means a simple task, especially if you’re trying to do it when they’re a little bit older and they’ve always had the freedom to spend. Traditional money boxes are still great when it comes to the physical side of saving cash, but they don’t necessarily do anything to encourage kids to put money aside in the first place.
Here are a few great ways to encourage children to save money that are simple enough for you to try at home.
Using two clear jars, get your children to split their money equally into two amounts. One amount goes into the savings jar, and the other into the spending jar. This is a simple idea that’s easy to put into practice, and it allows children to watch how rapidly their spending pot is depleted, in comparison to the growth in their savings jar.
Smashing Savings Jars
Try buying your child one of those savings jars that can only be opened by smashing it, instead of one with a lid or plug to get access to the money. There’s something very final about breaking your savings pot open, and kids are less likely to smash it until you tell them they’re allowed. To avoid a scenario where your child wants to buy something they’ve saved for, but they can’t get access to any of their money, try using the double jar savings method above. If you think about your “smashable” money pot as a long-term savings account, and a second ‘lidded’ pot as a current account, you can see how saving a little in each can promote a healthy understanding of accounts and finances.
Take the time to investigate several savings accounts with your child. Get relevant information from different banks and building society branches, or go online and research products together. Discuss the interest rates with them and regularly let them see how their savings are growing. The more they save in their account, the more they will earn in interest, which can also be encouraging for budding savers.
Let Them Earn Money
You can’t expect a child to understand the true value of money if it’s just handed to them, regardless of what they do or how they behave. A good life lesson, as well as a useful technique for helping them develop an appreciation of money, is to pay them for carrying out tasks around your home. It’s a win-win situation. Not only will you get some extra help with all those tedious domestic duties, but they will enjoy a sense of achievement that comes from earning their own cash. Knowing how hard they’ve had to work to earn it can be a trigger to help some children save for longer.
Handle Money Together
This is a particularly good option when you’re trying to instill financial values in younger children. In today’s cashless society, we’re so used to paying for everything with plastic cards or over the internet that children very rarely get to handle money and develop a real understanding of how it’s used. Whenever possible, let your child assist you when you’re paying for goods in a store. Let them see how the money reduces after a purchase and explain about the importance of keeping some money aside for a rainy day. If you can, put some of the change from your purchase into a jar so they can learn the value of saving.
This is another firm favourite with younger children but will work just as well with older kids. Discuss which large item they would like to buy. Try and settle on an item that could be saved for in a week or two to begin with, because anything longer than that will try the patience of the most intolerant children. Draw a savings chart with an image of their item at the top (think along the lines of fundraiser charts) and every time they put funds into their savings account or money box, mark the new level on their chart. This very visual incentive helps create some excitement around saving, particularly as the target figure comes into sight. If you have a particularly difficult child who insists on spending every penny they have straight away, then include a second column to show what they could have saved if they had put aside even half of their cash.
Long Term Savings Goals
Teaching children how to save is not an overnight process, and even when you get them into the habit of putting money away regularly, your job isn’t quite done. Look towards their long term financial needs, from larger purchases, to understanding the benefits of shopping around for the lowest prices. When you’re sure your child has a solid understanding of basic saving, it’s time to consider moving on to more