• Jeff Sproul

Instilling Savings Habits In Children And Young Adults


The on-going challenge to get ordinary people to make wiser decisions about their money is starting to boil down to this: How do we instill good habits in children? Talking about financial responsibility is definitely a good place to start, but a hands on approach is probably the best way for children to learn how to save money. Developing your children’s understanding of finances at a young age will help them to plan more effectively and make better decisions later in their lives.

Children are eager to learn as they grow, so it’s important for parents to teach their children positive lessons about money from a young age. When saving money becomes part of a child’s normal development, saving for the future is likely to become a habit. Early financial education can be the first step on the road to financial freedom.

One of the most important steps in becoming financially independent is opening a savings account. Whether it is a Youth Savings Account at your local bank or a TFSA for adult children, this is one of the easiest and simplest ways to start. Teach them how they can deposit money in that account and also how they can utilize their savings in the most effective and efficient manner.

Finances aren’t always the most exciting topic, especially for a young child, so try to make it fun. Physically taking them to the bank to make their first deposit can become an exciting event. If your kids are a bit older, you could also show them how to use online banking tools (and they may end up showing you something new too!)

One of the most important pieces of information for a child to remember about money matters is how much to save. It is usually suggested that adults put aside a percentage of their income. For children the same principal can apply for allowance or money earned by helping with household chores. Use this as a teaching tool; you can explain to them that if they receive a 10 dollar allowance they should put two or five dollars into their savings.

As an added incentive, consider matching any dollars they put into savings. If a future employer of theirs offers matching contributions towards retirement savings, they will have no trouble grasping the concept.

Savings mechanisms that are automatic are a great way to overcome our natural tendency toward inertia. Take the time to educate your child on automatic savings plans through electronic banking. For some children, a more visual mechanism like a piggy bank for loose change can be effective. The more saving becomes automatic, the less likely they are to “miss” the money, which will not only help with savings, but also temper spending habits.

Allow children to set a savings goal, such as saving up for a new bike, or another item they want. Use tools to track their progress toward their goal in a fun format. There are online tools available for tech savvy kids, and something as simple as a tracking chart on the fridge will have great impact. Where opportunities exist, make savings a contest – there is nothing better than sibling rivalry to drive success.

Learning about money shouldn’t feel like going to school, so make it fun by finding teachable moments in everyday life. When saving money becomes fun, kids look forward to repeating the behaviour. Be a financial role model. Children are observant, so they often emulate their parents’ behaviour. Be conscious of what you say and do around your children; your money attitudes will become theirs.

Learning about saving money is an important life skill, and you can never be too young to start learning about it - in fact the earlier people start the better off they will be in the future. Make sure you really drive home how important saving money is to someone’s future well-being and do your best to make it a fun, rewarding experience. Learning about saving by actually doing it can be one of the best ways to make the savings habit stick.


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