I am of the belief that starting to save from an early age, say age 6 and in fact setting savings goals, is a healthy way to view money. But how to get young kids to take to saving positively is another matter altogether. Here are a few ideas on how to make saving fun for young children.
1) I think the first thing to do is to take your child, even from age 6 or 7, into the bank with you to open their savings account. Most banks will have savings accounts for children with no fees, no minimum balances and a reasonable rate of interest. Help the child to fill out the application form and open the account. A reasonable goal should be to save 10% of the child’s pocket money into the account each month.
2) Let your child understand that the money is still theirs and will be used to buy larger purchases in future, such as iPods, CDs, skateboards etc. Help your child put up a graph behind the bedroom door or if they are old enough they can develop a spreadsheet on the computer. Then get him or her to plot each month how the total savings are growing. You will need to help them with this. They should also plot their savings target, so that they can see each month how their savings are growing towards their target, or savings goal. You will be amazed how this simple exercise will help them with maths at school as well, as they are dealing with the basics of arithmetic here. Let them stick a picture of themselves up on the chart to remind them that this money is still theirs.
3) If you have more than one child, set up a challenge to see who can reach their savings goal or exceed it by the largest percentage. If you don’t like the competitiveness of this, reward each child who achieves their target savings each month, in the beginning, then every few months after that. So, for example, you can agree on the savings goal, say after 3 months, and agree that when each child’s savings reach that agreed level, you as the parent will add $20 to their savings account. The child whose savings have grown by the greatest percentage (not dollar amount as the older child might be saving more on a weekly basis) might be given an additional $5 or $10 reward. Take them into the bank to deposit this reward.
This reward should be given not for work performed around the home, but for the savings goal achieved and will be money well spent by you, as these lessons get reinforced in your child’s mind.
You may find that one child is a much better saver than the other and to get the child who is less inclined to save up and running, it may be agreed to set lower targets initially. I remember that while I was a great saver in my youth, my younger brother never had any money in his savings account – he had almost always spent his pocket money before he even received it. We are still different in this respect today.
4) One thing that I learned rather late in life was the power of envisioning what it is that one wants in life – to see the positive outcome in your mind is a powerful tool. In the savings context, you might get your child to find a picture of what they want to buy once they have achieved their goal and get them to stick pictures on their savings chart of each item they are saving for. When the child is very young, simple things like adding a gold star to the chart is a good start. As the number of gold stars grows, the child will learn that what he or she is achieving is a very good thing. You may decide that 10 gold stars earns your child a ticket to the movies with popcorn, cold drinks and the works.
5) An idea that I used was to have a glass jar, where I would throw all my coins at the end of the day, or week. Then at the end of the month I would divide the coins in half, put half into my savings account and spend the other half. So in this way, I was delaying gratification even from my coins that I had left over in my pocket.