Parenting

Teach the value of saving to your child

Parentune Support
7 to 11 years

Created by Parentune Support
Updated on Sep 06, 2017

Teach the value of saving to your child

Six-year-old Anya had her eyes set on a lovely wooden doll she had seen at her friend's house. She had grandma's gift money in her piggy bank, but would it be enough for the doll? Sharath told his daughter that she could wait till her piggy bank was full, and they could go shopping. For the next few weeks, when the festival season brought in gifts, Anya waited eagerly until they could go and bring the beautiful doll back home. And when they did, the joy she felt was immense.

Sharath could have easily walked Anya down to the shops the same evening and bought her the doll with a swipe of his debit card. But he had taught her an important money lesson – the value of waiting. Children, even three-year-olds, are capable of understanding concepts like saving money, or spending it. When it comes to teaching children the importance of money, it is never too early. Start by teaching them to take good care of their toys and belongings, besides not wasting food and water. This teaches them to indirectly save by reducing wastage.

As they grow older, you can guide them on the basics of savings, types of investments and managing money. Our expert blog here, with inputs from Franklin Templeton Mutual Fund, gives you a step-by-step guide on how to initiate children into savings.

How Can I Teach My Child To Save Money?

Lessons in saving need not begin with money. Here are some easy ways to teach your young child to save-

  1. It's never too early: Even at age 3, you can start by teaching your child to reduce food wastage, or recycling toys
  2. Teach your child about resource conservation:Explain that fans, lights and taps should be turned off when not in use, not only at home, but in public places, too. Speak to your child about villages in our country that seriously lack power, water and even food, to communicate the message of conservation. This message can later be extended to money as your child grows older
  3. Curb impulse-buying: Your child's wants change as he grows older. When he asks for something he desires, like sports equipment, PlayStation, gaming devices, toys, or a tablet, take this opportunity to teach him about money. Instead of giving him the toy directly, make a challenge where he can put aside money over a period of time. The item can then be bought from the accumulated amount. This can curb the urge to buy impulsively,and communicate the principle of 'save first, buy later'. Parents may also try to avoid meeting all demands 'easily' (immediately) but instead stagger it over a few months or even a couple of years. All this would inculcate the habit of patience in the child. For instance you need Rs.30, 000/- to buy him a new laptop. For this, invest Rs.3000every month in avenues like mutual fund schemes and let him see it grow to Rs. 30,000. Use this money to buy the laptop. Show him the money that the money gets accumulated in the account until the target amount is achieved
  4. Start a gift piggy bank: Accumulate any cash received on the child's birthday or any other occasion in her investment account so that this can be used to buy something later. Story telling is also a good way to cultivate this habit like say the story of the King and the Game of Chess, which teaches the benefit of compounding

What Is The Right Age To Start Teaching My Child To Save Money?

If they start saving money in a small way, how should that money be optimally used to emphasise the point that saving is important? Like we've said before, the process of saving can start early – even as early as age 3. Initiate it by teaching the child the need to conserve resources such as food, water and power. Teach them to care for their toys by reiterating that damaged toys will not be replaced immediately. This will help the child extrapolate this habit to preservation of money in the future. When your child is 6 or 7 years old, you can teach them money basics starting with type of bank notes, cheques, pass book and basic account statement. Make learning fun by visiting a bank, ATM, post office or a mutual fund office. It is important to develop an attitude to save rather than just knowing how to save.

How Can I Teach My Child To Use The Saved Money Optimally?

If they start saving money in a small way, how should that money be optimally used to emphasize the importance of saving? Saving can be nurtured as an attitude with an emphasis on patience, regularity and discipline. It is also important to know and imbibe the concept of 'save now, buy later'. Impulsive buying of big-ticket items should be avoided and must always be routed through the saving route. A child can also be taught to be frugal at times rather than being prodigal so that the habit of saving gains stronger systemic roots.

Financial Tools Or Activities That Aid In Making Sound Saving Decisions

Are there any activities or financial tools that teenagers or older children can independently take decisions on? There are various saving calculators available on the internet. You can teach your child to create saving and expense tables as he grows. If MS excel is taught in school, he may prepare the tables in excel as well. However, you may stick to practicalities with more live examples for better understanding.

For example

  1. if the cost of the item is Rs.55 and you give a Rs.100 note, how much should the vendor return
  2. if you save Rs.2000 every month for 12 months, how much would you save in all
  3. if one ice-cream costs Rs.15, how much would 4 ice-creams cost? Involve your child in such purchases wherever possible so that he learns about money and savings as it actually happens. Visit to banks, ATMs, post offices, mutual fund counters must be encouraged and the transactions there should be simplified and explained to him. An older child can also be taught the concept of compounding and how money multiplies faster with passage of time if well invested
  4. Your child watches you and learns. Set an example to her by being careful with resources, and you will be amazed how quickly she learns to save. Involve her in discussions that she is ready for, and build her confidence.

    Did you find these tips on teaching your child to save useful? Please do share your views and feedback with us in the comments section below, as we would love to hear from you.

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| Sep 06, 2017

an interesting read . the suggested tips which I found really useful is 'curb impulsive buying'. this is what I even practice at home. whenever my girls, demand something just because their friends have it, I suggest them to save for a month and then go ahead with the plan, but with a rider that money would go in their piggy bank only for good behavior and confirming to rules laid down .hope this helps!

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| Jul 08, 2017

vinformative

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| Apr 05, 2017

Very informative.

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| Dec 06, 2016

very good article. I will note the points and start

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| Jun 15, 2016

Very nice suggestions

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| Jun 15, 2016

nice inform

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| Jun 15, 2016

I'm already following these points. it helps to check whether everything is going on fine

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| Jun 15, 2016

Very nice I will start with my kids to understand the value of money

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| Oct 20, 2015

It is very necessary for children to understand the value of money from the childhood age n to teach them is our main Moto....

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| Oct 09, 2015

My kids started own saving.

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| Dec 01, 2014

Take them to market n give them budget. They wud understand

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| Nov 20, 2014

great info

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| Nov 11, 2014

this is really helpful.. thanks for sharing :)

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| Oct 09, 2014

Useful tips

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| Oct 01, 2014

Nice article

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| Sep 29, 2014

Getting a piggy bank for kids is an excellent way to teach children about the value of money and the importance of savings

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| Sep 26, 2014

Take your child with you to bank or ATM

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| Sep 23, 2014

Parents need to teach their kids about money and how to properly save it.

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| Sep 18, 2014

good information

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| Sep 16, 2014

i have gifted them a dairy and have asked them to write watver amount they spend ...its a great exercise to inculcate the habbit of saving and understanding challneges of parents.

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| Sep 12, 2014

piggy bank is a good idea,, i will also buy it for my kid

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| Sep 09, 2014

I bought a small piggy bank . now my child atleast understands the concept of saving.

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| Sep 09, 2014

Shikha Batra and @mamta have you invested ?? My sister did .i shall share her feedback.

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| Sep 09, 2014

The habit of saving in children is really very important, it help them become responsible person

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| Sep 09, 2014

In today's scenario where prices are getting higher and higher, it has become important to instill the habit of saving in our children from very tender age.

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| Sep 09, 2014

Shikha Batra agree with you. But these days children are really demanding. New day new demands.

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| Sep 09, 2014

children should be taught value of money from their childhood.

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| Aug 28, 2014

Quite an informative article! Thanks for sharing such useful tips!

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