4 fun and creative ways to teach children the art of saving money

23rd June 2023

Teaching children the importance of saving money is a valuable life lesson that will benefit them for years to come. While the concept of saving may seem dull or complex to young minds, it doesn’t have to be! In this article, we’ll explore four fun and creative ways to introduce the idea of saving money to children. These activities will not only make learning about money engaging but also help instil good financial habits early on.

The saving jar challenge:
Transform the act of saving money into an exciting game by introducing the Saving Jar Challenge. Provide your child with a transparent jar and colourful stickers or markers. Set a specific goal together, such as saving for a new toy, a family outing, or even a future vacation. Encourage your child to save spare change or small amounts of money regularly and celebrate their progress by adding stickers or colouring the jar each time they reach a milestone. This visual representation of their savings will motivate them to continue saving and watch their money grow.

Reward-based savings:

Create a reward system that encourages saving by offering small incentives for reaching specific savings milestones. For instance, you could offer to match a percentage of the amount they save or provide rewards for achieving certain targets. Let your child be involved in setting their goals and selecting the rewards they desire. This approach helps them understand the value of delayed gratification and instills the habit of saving for something they truly want.

Entrepreneurial ventures:

Spark your child’s creativity and entrepreneurial spirit by encouraging them to start a small business or offer services to earn money. Depending on their age and interests, they could set up a lemonade stand, offer pet-sitting services, or even create handmade crafts to sell. This hands-on experience will teach them the value of hard work, money management, and the satisfaction of earning their own income. Encourage them to allocate a portion of their earnings towards savings, emphasizing the importance of setting aside money for the future.

Interactive budgeting:

Introduce your child to the concept of budgeting through interactive activities. Create a mock budget with different categories such as savings, spending, and giving. Use play money or an online budgeting tool specifically designed for children to allocate funds to each category. Engage them in discussions about prioritizing needs over wants and making thoughtful financial decisions. As they get older, involve them in real-life budgeting discussions, such as planning for a family vacation or managing monthly household expenses. This practical approach will empower them with essential money management skills.

Teaching children about saving money doesn’t have to be a boring or overwhelming task. By using creative and interactive methods, parents and educators can make financial education enjoyable and memorable. The four ideas mentioned above – the Saving Jar Challenge, reward-based savings, entrepreneurial ventures, and interactive budgeting – provide children with practical experiences that foster a positive attitude towards money and saving. By instilling these skills early on, we can empower our children to become financially responsible adults in the future.

Additionally, consider opening a Junior Savings Account to help them develop good financial habits from an early age.

What is interest?

Interest is a concept that affects our financial lives on a daily basis. Whether you’re borrowing money, saving for the future, or investing, interest plays a significant role. In this blog post, we’ll explore what interest is, how it works, and why it matters to you.

How does interest work?

Interest is typically expressed as a percentage and is calculated based on the principal amount, which is the original sum borrowed or invested. There are two main types of interest: simple interest and compound interest.

Simple interest is calculated only on the principal amount. For example, if you borrow £1,000 with a simple interest rate of 5% per year, you’ll pay back £1,050 at the end of the year (£1,000 principal + £50 interest).

Compound interest, on the other hand, takes into account both the principal and the accumulated interest. It’s calculated based on predetermined compounding periods (such as annually, semi-annually, quarterly, or monthly). As interest is added to the principal, future interest is calculated on the new total, resulting in exponential growth over time.

Why does interest matter to you?

Understanding interest is crucial because it impacts your financial decisions. When you borrow money, the interest rate determines how much you’ll have to repay, so it’s essential to compare rates and find the best deal. On the flip side, if you’re saving or investing, the interest rate determines how quickly your money will grow over time. Higher interest rates can lead to greater returns, while lower rates may limit your earning potential.

In conclusion, interest is a fundamental aspect of our financial system. It affects both borrowers and lenders, savers and investors. By grasping the concept of interest, you’ll be better equipped to make informed decisions about borrowing, saving, and investing, ultimately improving your financial well-being in the long run.

Nurturing wise choices: The power of saying ‘no’ to children

As a parent or guardian, you may have experienced a plea from your child/ward to buy something that you hadn’t budgeted for. Here are some tips to consider:

Be empathetic and understanding: Start by acknowledging your child’s desire and show empathy towards their feelings. Let them know that you understand their want and why it is important to them.

Explain the reasons: Provide a clear and age-appropriate explanation of why you are saying no. For example, you can mention budget constraints, the item not being suitable or necessary at the moment, or other priorities that need to be considered.

Offer alternatives: Instead of simply saying no, offer alternatives that are more feasible or aligned with your values. This could involve suggesting a similar, more affordable item, or proposing an alternative activity or experience that could bring joy or fulfil their want in a different way.

Encourage saving and goal-setting: Teach your child the value of saving money and setting goals. Help them understand that if they really want something, they can work towards it by saving their own money or by setting goals to achieve it over time.

Stick to your decision: Once you have explained your reasons and offered alternatives, it’s important to be firm and consistent with your decision. Children need to learn that every want cannot be fulfilled instantly and that it is okay to experience disappointment or frustration.

Remember, it is essential to communicate with your child in a patient and understanding manner, encouraging open dialogue and helping them develop a healthy understanding of needs, wants, and responsible decision-making.

A guide to raising financially savvy children

Teaching children about money management from a young age sets them up for a lifetime of financial success. By instilling good habits early on, you can help them develop the skills they need to make smart financial decisions. In this guide, we’ll explore practical tips to help your children become financially savvy.

Start with the basics:
Introduce the concept of money: Teach children about the different coins and bills, their values, and what they can purchase with them.

Saving: Encourage them to save money by providing a piggy bank or a savings jar. Teach them to set goals and allocate a portion of their allowance or gifts to savings.

Money Management:

Budgeting: Teach your children about budgeting by involving them in household budget discussions. Show them how to allocate money for different expenses, such as groceries, bills, and savings.

Needs vs. wants: Help children understand the difference between needs and wants. Encourage them to prioritise their spending on essentials and save for items they desire.

Earning and entrepreneurship:

Allowance: Consider giving your children an age-appropriate allowance tied to chores or tasks. This helps them learn the value of work and earning money.

Entrepreneurial skills: Encourage children to explore their entrepreneurial side by helping them start small businesses, such as a lemonade stand or a handmade crafts store. This teaches them about money, customer service, and responsibility.

Banking and Saving:

Open a Junior Savings Account: When your child is ready, open a Hertsavers Junior Savings Account. Teach them how to deposit money, track their balance, and the benefits of earning interest.

Saving goals: Help your children set savings goals for short-term and long-term purchases. This can teach them patience and delayed gratification.

Smart spending:

Comparison shopping: Teach children to compare prices and quality before making a purchase. Show them how to research and make informed decisions.

Needs before wants: Encourage children to think critically before making impulse purchases. Help them distinguish between essential needs and unnecessary wants.

Giving back:

Philanthropy: Teach children the importance of giving back to their community. Encourage them to donate a portion of their money or volunteer for charitable causes they care about.

By following these tips, you can help your children become financially savvy individuals. Remember, financial education is an ongoing process, so continue to reinforce these principles and provide opportunities for your children to practice their money management skills. Empowering them with financial knowledge at a young age will set them up for a brighter future.