9 easy ways to encourage your child to save
Published 29 July 2013 by Helen Gradwell
There are a lot of ways to encourage your children to save money for their future. 30% of parents choose to do this by using a moneybox or piggybank. thinkmoney explores different ways to teach your children to save.
thinkmoney recently found that 30% of parents use a moneybox or piggybank to encourage their under-16s to save money.
We think this is a really good way to get your child started in the world of personal finance. It teaches them that money doesn't have to be spent straight away, and encourages them to work towards their savings goals on their own.
And - as most of us might remember - there's nothing quite like the first purchase you make with your own savings, no matter how long it took you to scrape together.
So, using a moneybox is one way to teach your child about money and savings. But 70% of parents aren't using a moneybox - so what are they doing? Here are 8 other ways that parents could encourage their children to save and teach them about money.
Split their money into two
This does involve a moneybox arrangement of sorts. Give your child two boxes (preferably clear ones - like jam jars - so they can see their money growing). Label one for 'spending' and one for 'saving'. Hopefully they should get a sense of how quickly money disappears from the 'spending' jar, but how it builds up in the 'saving' one.
The thinkmoney Managed Current Account is designed to work like this. It splits your money into two - holding money back to cover your essential bills, and moving the rest to a separate 'Card Account', for you to spend. It's for UK residents aged over 18 - so it's not for kids - but if you like the sound of it you can find out more about the thinkmoney account here.
Give them pocket money in return for chores or good behaviour
Most children receive pocket money, but it's a good idea to give them money in return for certain things. Whether it's washing the dishes or just "don't be naughty", your children will learn that good behaviour or chores can be rewarded. This helps money take on importance and meaning - rather than something that is just handed to them arbitrarily. And, of course, they might want to save it in their moneybox.
Let them handle money
A moneybox isn't the only way to do this (although it is a good way). When you're making small purchases - for example, putting money into a parking meter - hand the coins over to your child. Tell them how much is there, what it's buying, and let them put the money into the machine themselves. As they put each coin in, count them up to the target ("one pound, one pound ten…"). This is a tip that will probably work best on small children.
Open a savings account with them
Visit a comparison website and show them all the accounts available that could help children (or their parents) save for the future. Talk them through some of the features (if you think they'll understand) and maybe even let them choose one. Go through the application process with them and show them the account periodically once it's open. Some accounts for children offer a card that can be used at cash points - so you could use this to teach them about how to use a bank and withdraw money. Just make sure you keep your eye on how much they withdraw!
Use a savings chart
Draw up a savings chart together, with their ultimate savings goal at the top. Every time they put money into their moneybox, or you put money into their savings account, add it on to the chart. Make sure you tell them exactly how much money has gone in, especially if you put it in yourself. Let them guess how long it might take to reach the goal at the current rate of saving.
Search for money-managing games and apps
It's likely that your kids will have a good grasp of technology - especially if they're older. This is a good time to let them play with games and apps that teach them the importance of money. Any game - even something like Temple Run - with a 'coins' system will teach your child that money builds up and has to be spent carefully. Just remember to make sure they can't access the store to buy 'coins' with real money!
Give them a loan
If you want to teach your child about borrowing and debt, tell them you're giving them a loan. This money absolutely has to be paid back - plus interest. For example, you could lend them £5 and explain that they have to pay that back plus an extra 50p. Tell them that if they'd taken the time to save up that £5 instead, they wouldn't have had to pay the extra 50p. This may be difficult for smaller children to get their heads around, though. It's important to emphasise that they should usually avoid debt wherever possible - but if they do ever have to borrow, they should understand how it works.
Look for deals with them
Well - the big day has arrived and your child has saved up enough to buy their dream item. But you've saved the best until last. Sit down with them and use the internet to look for deals and savings on that item. If you find a used item, explain that it's cheaper because somebody has used it before them. If you find any discount codes, explain what they do and let them watch you enter it to the online shop. Ideally, try and find an item that costs less than your child's savings. Then you can tell them the happy news that they actually have some money left over after making their big purchase!