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Encouraging Children to Save

Explaining the ins and outs of money to children can be hard, especially if you’re not overly sure about some aspects of it yourself. From September this year money management will enter into the school curriculum in the UK, but even so, you should try to instil good financial habits while your children are young. Encouraging saving is an important part of this, as it will give them a good base to start from, as well as teaching self-restraint and delayed gratification. Both of these are integral to a life of minimal financial hassle, so making saving a habit is the gift that will keep on giving.

One of the best ways to encourage saving behavior is to create a reward system. You could pay a certain amount of pocket money as interest on any money saved up by your children. This could mean that you act as ‘the bank’ and keep their money stowed away for them. This could be in physical form for them to see (such as in a jar on the mantelpiece) or in a bank account under your control. For older children, their own bank accounts can be opened so that they’re able to manage the money in it themselves.

Explaining to your children how interest works is an important lesson, especially when it comes to compound interest. The more money you have, the more interest it will create, which will give you more money…and so on. Although rates are nothing to write home about these days, they will eventually rise, and are likely to fluctuate within your and your children’s lifetimes so it’s important to teach them to make the most of both the good and the bad.

As a lesson in saving, you could sit down with your child and explain what one weeks’ worth of pocket money could buy (or one chore’s worth of reward, depending on the system that works in your house). You could then show what two weeks’ worth would buy, to demonstrate that waiting a while could mean bigger and better things. If your child ever asks for a particular toy or gadget, then you could do some simple division to show just how many weeks they’d have to save up to buy it. This will not only make them appreciate the value of their money, but it will also make them realize just how much things are relative to their situation. This should hopefully help with budgeting in the future.

If your child wants to save up for something specific, then you could help them to visualize this goal by breaking up the amount into 100 pieces. For example, if they want to buy something which costs £35, then they’ll need to save up 100 lots of 35p. You could show this as a 10×10 grid, where your child could color in a square each time they save 35p. This will help them to see the goal much easier, and showing progress is always helpful as it lends encouragement.

This article has been written by Coral Pearce-Mariner on behalf of


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