Building savings habits young.

Saving money is one of the most important aspects of building wealth and financial stability. However, for many of us, we've learned the importance of saving money through trial and error, and more importantly, experience.

In school, we weren't taught about the importance of saving, and many of us find that as adults, we are left to fend for ourselves. But, there are ways to empower the next generation, and that starts by teaching children the importance of saving from a young age.

Wants vs Needs

The first step in teaching children the value of saving is to help them distinguish between wants and needs. Explain that needs include the basics, such as food, shelter, basic clothing etc. Wants are all the extras - from cinema tickets and eating out to toys, a bicycle, or the latest smartphone.

You can quiz them on items in your home to embed the concept. For example, point out items in their bedroom or the kitchen and ask them whether the object is a need or a want. This allows you to explain the idea that you have to prioritise what you spend money on, leaving some money for future necessities.

Provide a place to save

Just as important for your children as it is for you, when your children have a savings goal in mind, they’ll need a place to stash their cash. For younger children, this may be a piggy bank (you could even try one of those fancy digital piggy banks), but if you're looking for something different, why not check out savings accounts designed for young people? Take a look at our Young Saver Accounts.

This will teach them the importance of having a safe place to store their money, not in their main account as this can introduce the temptation to spend their savings.

Let them earn

Giving your child regular pocket money can help build their understanding of how money works. If you want your children to become savers, allowing them to earn and save money provides them with the opportunity to learn how to use it. When you offer allowances in exchange for chores, they’re also learning the value of their hard work. 

Set savings goals

To a child, being told to save - without explaining why - may seem pointless. Helping children define a savings goal can be a better way to get them motivated.

If they know what it is they want to save for, help them break down their goals into manageable bites. If they want to buy a £50 video game, for example, and they get £10 pocket money each week, you can help them figure out how long it will take to reach that goal.

Talk about money

One of the biggest reasons many go into their adult life with limited financial knowledge is because their parents didn't talk about money. This cycle can perpetuate throughout generations if left unchecked. 

You don't need to go into detail about your finances, but talking about money and how much things cost can help your children learn there is no 'money tree' - the key is to keep a conversation going.

Money doesn’t have to be scary or taboo. Use financial discussions as teachable moments. An innocent question such as “Are we rich?” can be answered in a way that emphasizes family values, such as hard work and responsible spending. Letting them know you’re always open to having a conversation about money can encourage them to ask questions of their own to keep learning.

The bottom line

If you’re a parent, making saving a regular part of your child’s routine can lay the foundation for a bright financial future. Building healthy habits at a young age makes children more likely to grow into adults who experience much less financial stress than people who didn’t grow up with this kind of experience. Not only that, but saving and money management can help build maths skills by using numbers in a tangible way.