How to teach children to save money

The parents have the prime responsibility to teach their children the importance of saving and then investing. But how to do it? Read this article to know the steps the parents need to take to teach financial prudence to their children.

The foundations of character and habit are built during the childhood. Parents play the most important role to build the foundation. Inculcating the habit of saving by preventing a child to spend extravagantly and later the habit of investing is the responsibility of the parents. In this article, we will discuss how parents can develop these habits in their children. Indeed, the parents can best teach their children: 'One rupee saved is one rupee earned'.

Teaching small kids

The small kids below 7 years must be taught about the importance of savings by making it fun for them. The following methods would be useful for very small kids.

Using different envelopes/jars for different purposes

At the first instance, the parents can make two envelopes/jars, one for short-term savings, one for long-term. The envelope/jar for short-term saving may contain a beautiful picture of the item which the kid wants (say an ice-cream or a particular type of school bag). The envelope for long-term saving may contain the image of a tourist place where the kid aspires to go.

Making a saving goal chart

After knowing the purpose for which the kid wants to save money, the parents can prepare a colourful chart setting a target of weekly saving to have that particular item. This would help the kids to set up targets for themselves and to try to achieve the targets.

Offering rewards for saving money

Parents must encourage the children to save money by offering rewards. For example, if a child doesn't spend any money for say a week, parents may give him/her a small treat explaining the reason of the treat to the kid. The kid would be encouraged not to spend extravagantly in future.

Matching the child's contribution

A saving match is another great way to encourage the children. For example, parents can put some money in his/her envelope/jar when he/she is watching. The parents can also announce beforehand that if the kid saves Rs. 5/-, then the parents would also contribute Re. 1/- (an example).

Playing money games

This is another way to teach children why saving money is important. For example, parents can play 'The Businessman' with their kids and explain saving money to purchase a toy home or similar items by saving money.

Setting a good example

Kids would follow parents if they see that their parents are not spending money on unnecessary items. So, don't spend money extravagantly, especially in front of the children.

Helping older kids

Besides the above, for the older children (above twelve years), parents may take following steps to teach and encourage them about saving and then investing.

Asking them to prioritize

Parents can ask the children to write down their wish-lists an then prioritize. They should be asked to think long-term also (for example, buying a lap-top with their saving, etc.).

Looking for good deals

The children must be encouraged to check availability of greater rebate for their books. They must be taken to shops and stores and taught to resist temptations of useless purchases associated with deals like 'buy three, get one free'.

Teaching the concept of investing

Children of twelve years and above must be taught about the concept of investing. The parents must teach them mathematically how the investment grows.

Opening saving account and recurring deposit account

The parents must take the children to the bank and associate them to open saving bank accounts and recurring deposit accounts in their names. They must learn to put money in saving bank account and save and invest regularly in recurring deposits. This would help the children to understand banking transactions and various types of investment. They will also gain self-confidence in the process.

Final words

If the parents patiently inculcate the value of saving and investing among the children, this would immensely help them in future. The aforestated simple steps would help the children to attain financial prudence in due course.

Related Articles

How to prevent acne scars?

This article explains various measures which keep acne under control. This decreases inflammation and consequently chances of formation of acne scars too decreases. Actions like not picking at skin, proper hydration, using sunscreen lotions, proper skin care regime etc prevent formation of acne scars.

Smart tips to cut expenditure and save more

In this article we will learn about some useful ways which will help us in managing our salary in a smarter way. Every working person, be it man or woman should inculcate the good habit of saving. Saving secures present as well as future. This article is mainly about how to reduce expenditure which will directly lead to more saving.

How to bring your audacious child back to his former lovely self?

You couldn’t get even the feel of it when did your lovely child, the innocent little thing turned up so cheeky and reckless. What to do under such situation to bring the child back to his innocent former self? That is what this article is going to detail you with.

How to keep your children ahead by recognising their mood?

If you want your child to remain in front then it is essential to recognise the psychology of your child so that he has a bright future. When the mood of the child is to play, don’t press them to sit for studies. This article suggests you what to do to achieve this purpose.

Travel tips while traveling with children

The present article gives a few tips to follow when you are traveling with children. Children, by their nature cannot be steady in their behaviors or reactions and soon get bored and tired of travel. They will not be able to tolerate hunger or sudden weather changes and may even fall sick. So it is always necessary to take some advance precaution to take care of their needs, food and drinks, rest and to keep them engaged and active. Here are some useful travel tips to be handy when you travel with children.

More articles: Child Save Money How to Money


Author: Purna Prasad Sharma20 Mar 2016 Member Level: Silver   Points : 2

Partha ji some parents think to keep away their child from money matter as that bring negative impact into them by coming into the touch of money.And even we come across some children who entirely indulge in money matter taking everythings as a deal and losing social values and customs.
On the otherhand keeping away is also not proved very useful in most of the cases.Make aware or familar to the circumtances of time is also become important to teach the children about worldliness. So, keeping in mind the time's necessity better to conscious the child about all the importants in the world.

Author: Sheo Shankar Jha20 Mar 2016 Member Level: Gold   Points : 4

Parents should always remain in fore - front to teach their children how the money can be utilised and a proper control of the same would go a long way in inculcating a healthy habit among them. However, the age as you have suggested seem to be somewhat impractical since a child of seven year may not apply his prudence in money - saving mechanism. The best way would be to initiate such home - exercise for a couple of years and while you are undertaking an exercise of purchasing an article from the market. You must talk before the child why it is essential to purchase and why this brand was chosen for the final purchase. Such training would strengthen his mental faculty. Realistic - age for handling money for your child should be pegged to ten, when the child can apply his intelligence about the viability of such initiative. The child would certainly follow you whatever you do and hence a congenial atmosphere at home would influence his decision making.

Author: K Mohan25 Mar 2016 Member Level: Platinum   Points : 4

Creating a saving habit among the children is the great attitude and idea as every parent must inculcate this habit at the young age. In this regard I wish to share the personal experience of my children. Both of my children will never spend money when given to them as tips or by the elders during festival. They have the piggy bank toy and they save the money in that. All their wants are looks after us and they wont have any grievance in that regard. So what ever money they earn through tuition also they go on saving. Once I had the urgent requirement of 1000 rupees to meet the urgent commitment. When I was wondering as to how to adjust, my daughter parted with 1000 rupees she saved in her piggy toy and thus I got much relief and felt very happy about their saving habit and reaching out to help when needed. Surely every parent must see that children should not spend on unwanted things by buying road side items for their temporary joy and thus by having a saving habit, they can understand the life better in future.

Author: SuN01 May 2016 Member Level: Platinum   Points : 3

I will not appreciate if children are given a piggy toy and cash to save at a very tender age. Instead, teach them about the saving habit from the day they start their earning. Parents should show them their bank savings account. Also teach them how the hard earned money should be spent. How to plan our budget saving/spending. Certain children would start worrying about their saving and might forget studying the books. At times, children mind develop a miserly attitude due to the saving habit. They would only save, not spend. Let us teach our children lesson but not practice it through piggy toys.

  • Do not include your name, "with regards" etc in the comment. Write detailed comment, relevant to the topic.
  • No HTML formatting and links to other web sites are allowed.
  • This is a strictly moderated site. Absolutely no spam allowed.
  • Name: