Teaching children how to save

A key life skill for children is how to save and budget for the things they want. This will not only ensure you’re helping to give your children the skills and discipline they need for a more secure financial future, but also may save you some money.

Here’s some ideas to get you started:

• Talk about money
• Lead by example
• Get your children familiar with handling money - make a savings jar
• Match their savings
• Help your children with their own financial planning - make a savings chart

Talk about money

Having conversations about money builds children’s confidence on the subject and helps to develop their financial skills. Speak to them about how to save for the things they want. Importantly, let your child hear you talk to your family and loved ones about money and savings too – perhaps your pension for example – so they will realise that saving is something important.

Lead by example

The most effective way to teach your child any good habit is for them to see you doing it, and saving is no exception. If you’ve told them about all the positive benefits of saving, but you don’t do it yourself, it’s unlikely they will either.

There are a number of ways you can do this. When you deposit savings – whether you do it online, over the counter at the branch, or at the cash point – involve your child, explain to them what you are doing and why. If you are saving for something in particular, such as a holiday or Haj for example, share your positive feelings with them about saving for something that you really, really want. For a more immediate visual cue, you could even start saving your small change in a jar. The amount is not so important as the fact that you are making saving a ‘normal’ thing to do.

Get your children familiar with handling money

A great way to familiarise your children with handling money is to get them something to save their money in. They may be too young to be saving for something in particular, but they will still enjoy seeing their own money grow. You can count it together regularly – helping them with numeracy too.

Make a savings jar- or two

Depending on the age of your child, it can be hard to explain the point of saving. Spending is fun with immediate gratification, however, saving for something in the future is a harder concept to grasp. A good way to tackle this is to make a savings jar. All you need is a clean jar and a picture of something your child really wants, which you tape to the front. Then they will experience handling money and every time they put money in the jar, they will have a reminder what they’re saving for. Set realistic targets though, because if your child picks a very expensive item, they may get tired of saving long before they reach their goal. Of course, it is also possible to make more than one jar – for example if your child wants to put a few coins aside for a charity, for example.

Match their savings

Seeing savings grow is a great motivator, for children and adults alike. Therefore, if you can help your child by matching a portion of their savings or paying them a small financial reward when they reach their savings goal, they will be encouraged to stick to the savings habit. Another thing to consider is giving your child pocket money in return for specific chores, such as keeping their room tidy or helping to lay and clear the table. This will teach them a good lesson about being rewarded for work, even when they may not like the task.

Financial planning

For older children, it is possible to lay the foundations for future financial planning. Ask them to write out a list of things they want to spend their money on. This is very different to asking them to write a list of things they want, and you will be surprised how much effort they will put into the task.

Once they have prioritised this list, ask them to put down the amount of income they are willing to save every week or month towards that goal. Their ‘income’ can include pocket money, and wages if they are old enough to work a little. It is possible to boost their savings by money they may receive for birthdays, or Eid. This financial planning will really focus your child’s mind and will serve them well in the future.

Make a savings chart

A good motivational activity is to make a savings chart. Once you know what your child is saving for, figure out how many weeks it will take and make a chart together. And for every week when your child successfully saves their money, they can put a star or a sticker on their chart. This is a really powerful way to show how they are getting ever closer to their goal.

It’s never too early – or too late – to start saving. Whether you're looking for instant access or are happy to lock your money away for longer, Al Rayan Bank has a complete range of savings accounts. To find out more, click here.