Teaching Kids How to Save Their Pocket Money

Encouraging healthy financial habits early in life can play a pivotal role in ensuring financial security in adulthood. And a great way to get kids involved in discussions about money is by bringing up the topic of saving!

So, we’ve created a guide filled with some top tips for teaching kids of all ages about saving. From the classic piggy bank method to the importance of opening a bank account, we’ll teach you how to stand your child in good stead for a healthy financial future.

What is financial literacy?

If you’re financially literate, you’ll be equipped with the necessary knowledge on topics such as saving, budgeting, credit scores and investing. Adequate financial literacy leads to well-informed financial decisions, and it is the key to success when it comes to money.

But is financial literacy important in childhood? And if so, how can we teach financial literacy to kids?

How to encourage financial literacy in kids

Introducing the concept of money and savings to children is undoubtedly important. And,

kids can understand the concepts of saving and budgeting from a fairly young age.

So, by including children in age-appropriate, engaging activities (such as saving coins or budgeting their pocket money), you can help lay the foundations for great financial literacy.

Talking about money can help build confidence when it comes to finances, so the earlier you start the better. There are many resources available which aim to empower children to make positive financial decisions. And, we’ve got an in-depth guide on how to teach children about money which you might find helpful.

What age should I start teaching my kids about money and savings?

As mentioned, when it comes to teaching kids about money, the earlier the better! While all children grow and develop at different rates, here are some general, age-appropriate ways you can teach children about money:

• 3–4-year-olds: when younger children start to talk and learn through play, you can introduce the concept of money through games including coins.

• 5–6-year-olds: at this age, a child’s understanding of money will be growing. You’ll need to maintain an element of intrigue and fun, so why not introduce the concept of saving coins for a toy?

• 7–8-year-olds: children of this age will understand the difference between ‘needs’ and ‘wants’, so you can begin to introduce the concepts of budgeting, spending, and saving.

• 9-12: why not give a child of this age pocket money and teach them the value of saving and budgeting?

• Older children and teens: you can give older kids and teens more freedom when it comes to money. Lead by example and help them with things such as saving and sticking to a budget.

The best ways to save money for kids

One of the best ways to get kids engaged with money is by introducing the concept of saving. But what are some of the best ways to save money for kids?

The classic piggy bank saving method

The visual aid of a piggy bank can make a huge difference when it comes to saving, and it’s possibly the best way to save money for kids.

Having something physical to drop coins and notes into can make the concept of saving tangible to children. Seeing accumulating physical money is guaranteed to motivate kids to save.

Also, why not encourage saving further by having your children decorate their own jars? An afternoon of arts and crafts can go a long way in making the whole process fun for kids. Designing your own savings pot is a great activity for children of all ages.

Opening a bank account

If you’re looking for a more secure way to store your money, opening a bank account is a fantastic idea. And, if you’re wondering how to save money as a teenager, this can be a great option.

Generally, a bank account can be opened for a child from the age of 11. And when you reach the age of 16, you can usually open a bank account yourself.

Budgeting and saving go hand in hand, and many banks have dual spending and savings accounts for 11–15-year-olds. So, with a simple application, your children will be able to learn how to properly manage their money. And handily, parents will usually have oversite of these accounts.

Pocket money for kids is a great way to teach them the value of saving, spending, and budgeting. And if you’re wondering what age is pocket money appropriate? There really is no right age, as research shows that children as young as six get given an allowance!

If you pay pocket money into your older child’s account, you’ll be able to keep your eye on how much they’re spending.

How can I motivate my children to get involved in saving?

Establish realistic goals:

Establishing realistic goals is important when it comes to motivating children to save. You’ll want to sit down with your child and decide exactly what it is they are hoping to save for. This could be anything from a toy to a birthday gift for a sibling, or a special day trip.

Having a clear goal is guaranteed to spur your kids on to save. Then, all you’ll need to do is decide on a method of saving: either a physical savings pot or an online account.

Establishing goals works well for older children, and you can even start encouraging them to save for things such as university.

The sense of gratification they’ll get for saving for something and purchasing it themselves will motivate them to carry on saving in the future.

Celebrate milestones

It’s equally as important to celebrate savings milestones. For instance, once your child hits a goal, you should acknowledge their progress to reinforce positive saving habits.

A great option is to suggest saving for a fun daytrip. This way, once they hit their savings objective, they’ll be able to celebrate with a day out. You can help them breakdown the trip’s costs, such as money for transport, souvenirs, and food.

Top tips for teaching kids about saving

1. Start early: talking about saving with kids from a young age can lay the foundations for healthy financial habits. Teaching through roleplay is educational and fun, and you can create simple money-themed games.

2. Make it engaging: for some fun ways to save money, why not take kids with you to the supermarket and let them help you spot deals and discounts. Real life saving examples can help keep children engaged.

3. Make use of technology: while cash is a great way to teach children about money, technology has some fantastic tools and apps to help.

4. Lead by example: Children learn a lot from those who take care of them, so parents and caregivers should practice healthy habits which children can emulate as they grow.

Education is key when it comes to money, particularly saving! And the earlier you learn, the easier it is to establish and maintain healthy habits. So, give your youngsters the gift of knowledge, and help them secure a healthy financial future.

And there’s no need to fret If you too need to brush up on your savings skills. Teaching is a great way to learn and consolidate skills of your own, and the process can be mutually beneficial for parents and kids alike.

If you’re looking for ways to save of your own, head over to our guides on simple ways to save money, and effective monthly budgeting tips.

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