5 tips to help your child save smarter

Estimated reading time
 5 min

Learn all about

• Setting up a savings piggy bank (or jar)
• Making a budget with your child
• Encouraging savings goals with your kids

When your child gets birthday money, their first ever pay cheque, or some spare cash for doing the dishes, they might feel unstoppable.

They’ve got their own money that they can spend on anything – a new phone case, a fresh fit, or even a book from their favourite series.

But what if they saved their money instead of the kid equivalent of splurging? While your child might not be thinking too hard about the future, encouraging a saver’s mindset early in their lives can help them to develop healthy saving habits when they’re older.

That’s why we’re going to show you how to help your kids save smart and set them up for long-term success.

For the younger ones: Set up a piggy bank

Using a piggy bank to save is an oldie but a goodie. Your child might feel absolutely chuffed every time they put away their birthday cash or pocket money and watch their savings grow before their eyes.

If you’ve got multiple children, then set up a competition to see who can save the most by a certain date (like the end of the year or month). You can also get in on the action – kids love winning a competition against their parents.

Don’t use physical cash that often? Then we’ve got you covered. Consider opening a bank account for your child. While they might not have access to the full benefits if they’re under 12, you can still deposit the cash they earn or receive and they can withdraw it when they’re older.

For the big dreamers: Set SMART money goals

No matter if it’s their first pay cheque, a gift from nan, or cash from their dog-walking gig, your child might be tempted to spend their money on the first thing they see. This is where you can step in and help your kids set a goal.

By setting a goal, children will be encouraged to keep their eye on the prize. To keep them motivated, write their goal on a sheet of paper or print off a picture of what they want to buy and stick it on the fridge. You can also download and fill out our SMART dream board (PDF) to help them learn the goal-setting basics.

Taking the time to set meaningful goals now can help your child set bigger ones when they’re older.

  Hot tip:

Help your child visualise and track their goal so they can feel more motivated to achieve it. This is a classic case of the goal gradient effect, and it’s something that your child can apply in their adult lives when setting bigger goals, like saving for a home deposit or buying a car.

info image

For the kids who need a gentle nudge: Match their savings

If your child needs some motivation to save, consider matching their savings whenever they reach a goal or milestone. For example, if your child saved up $50 and that was their goal, you might pop $50 into their bank account to reward their progress.

Matching your kid’s savings is a type of incentivisation, which is when you attach a reward to a positive behaviour (or a penalty if you fail to do something). In this scenario, your child reaching a financial goal, or saving regularly, are the positive behaviours that you’re rewarding.

For the young money makers: Build a budget together

When your kids start earning an income, help them divvy up their hard-earned cash with a budget. A budget can teach your child how much they can put towards their goal while having some ‘fun’ money left over. This skill will come in handy when they’re older and have to pay for their own expenses, such as rent or groceries.

You can start teaching them this life-long habit in a pretty simple way. All it takes is three jars (physical or otherwise):

• Save – to help your child work towards their goal.
• Spend – your child’s ‘fun’ money.
• Share – how much your child wants to donate to a charity or spend on others, like a friend or family member. If they’re not sure how to spend this portion, they can pop it into their savings.

For any kid at any age: Get them to think before they spend

When you’re out at the shops with your kids and they see something they want to buy, encourage mindful spending. Ask them some questions, like “Is this a want or a need?” or “How does buying this help you achieve your goal?”, to help them really think about their decision.

If they are hellbent on buying something, suggest they save their money for later. Explain that it might feel good to buy something now, but you could save that money and buy something bigger and better later. This can help them to overcome what’s known as hyperbolic discounting which is where smaller, immediate rewards are favoured over larger, delayed rewards – even if the larger reward would be more beneficial in the long run. By teaching your kids to think before they spend, they will be better equipped to make the right decisions when they are older.