5 fun ways to boost your kids’ savings
These saving methods can help teach and motivate kids to save.
Financial planning doesn’t have to be boring. There are plenty of engaging and creative things to do when teaching your kids about saving and budgeting. By making the experience enjoyable, kids will remember this as a valuable life skill — one that motivates them and carries into adulthood.
1. Embrace the three-jar system – aka Piggy banks
Whether you call them piggy banks, money jars or coin collectors, these tools offer a tangible way for kids to grasp the concept of financial management. A three-jar system empowers kids to allocate money toward saving, spending and giving, providing a clear and visual representation of where their funds are going.
While some financial experts recommend allocating 50 to 80% of money toward spending and 10 to 25% toward saving, most kids don’t have the same financial responsibilities (i.e., bills) as adults. This is the time when they should be putting more toward saving and less toward spending.
Once they’ve saved a substantial amount of money in their savings jar, consider using it toward opening a savings or investment account for your kid. That way, they can accrue compounding interest on their savings. Make a habit of depositing that money every so often into an interest-bearing account.
If you prefer a more digitized approach and aren’t too keen on making many cash deposits, debit cards for kids can streamline the process for you.
Hot tip: Don’t limit your options to traditional kids’ savings accounts, as they typically offer lower rates. Explore regular high-yield savings accounts that allow you to open an account as a custodial or joint owner with your kid.
2. Start a kid-friendly budget
Budgeting isn’t solely reserved for adults earning an income and with bills to pay. It can be a creative and fun way for kids to grasp the concept of financial planning and saving, albeit on a smaller scale.
A great time to introduce budgeting to kids is during the holidays, as most kids are excited about receiving and giving gifts.
I fondly recall my own childhood when my parents would give me $25 to $30 to spend on holiday gifts. It was definitely a lesson in resourcefulness as I thought of creative ways to stretch those dollars.
To start, ask your kids to compile a list of people they plan to give gifts to. Next, talk about how much spending money they have to use and help them split or allocate certain amounts per person.
Encourage them to get creative and explore DIY projects like crafting picture coasters, keychains, ornaments and more — especially if their budget doesn’t cover everyone on their list.
3. Kickstart a savings challenge
Money-saving challenges are a great way for adults and kids to build their savings. The easiest way to begin one is by starting with a single penny.
Here’s how it works: On the first day, your child saves one penny, on the second day, two pennies, on the third day, three pennies, and so forth. By the end of a year, their savings would amount to approximately $667.95.
You can also adjust it to fit your family’s needs. If you don’t carry around change, you might find it more convenient to modify this into a weekly or monthly challenge. For instance, a similar challenge, called the 52-week challenge, calls to save $1 in the first week, $2 in the second week and so on. You could also set up a dedicated kids’ bank account for easy money transfers.
4. Create a fun race to save
Encourage your child to save with an exciting savings game. Offer to match their contributions dollar for dollar or offer a set amount like $0.50 for every dollar they save.
If you have multiple children, turn it into a friendly savings competition with the chance to earn rewards at the end of the month or year. Create a visual chart to track their progress in the race to save.
5. Start a consistent income with chores and allowances
Kids need some sort of money coming in to practice their money management skills. But here’s where we get a bit controversial. Some argue in favor of rewarding kids for completing chores, while others firmly believe that chores are a natural part of daily responsibilities and shouldn’t be something you pay your kids to do.
If you’re on the fence, there are many options of what this could look like for your family. For instance, instead of paying kids to complete chores, explore a rewards system based on the number of books your child reads in their free time or base it on their academic achievements, such as earning A’s or B’s on their final report card.
Every family is different, and there’s no one-size-fits-all approach. You know what’s best for your family, so have fun exploring different ways to do this. If you’re not sure where to start, resources like chore calculators and kid banking apps can help streamline the process for you.
Teaching kids about financial planning and saving can be enjoyable and memorable. By incorporating piggy banks, holiday budgeting, savings goal challenges or matching contributions, you can instill valuable financial skills in your children, which could become lifelong lessons they take into adulthood.
About the Author
Alexa Serrano Cruz is a senior editor at Finder, specializing in banking. As a personal finance expert, she helps Americans make informed decisions about their finances. Her expertise includes savings, budgeting, kids’ banking, and more. Prior to joining Finder, Alexa worked as an editor in Miami and New York.
Alexa is a certified anti-money laundering specialist and her personal finance expertise has earned recognition from reputable publications such as Nasdaq, Best Company, U.S. News & World Report, MSN, Yahoo, and Valuewalk. Alexa has also made notable appearances on platforms such as Winnie Sun TV, money podcasts like LifeBlood, and broadcast news publications like Fox News and NBC News.
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