Teach Your Children to Be Early Savers

Penn Mutual

By Penn Mutual | March 7, 2018

Learning healthy financial habits early on can set children up for a successful future. But although almost 90 percent of parents talk to their kids about money, nearly 60 percent feel ill-prepared to tackle the topic and prefer to leave it up to schools, according to a survey from education technology company EverFi. That’s worrisome, given that T. Rowe Price’s 2017 Parents, Kids & Money survey notes that parents frequently have the most influence on their kids, and money habits are molded prior to high school.

Luckily, teaching your kids to be money smart doesn’t have to be intimidating. Here are some strategies for giving your children a head start on saving:

Give an allowance

Kids learn by doing, and a weekly stipend can help them put theory into action. Although there’s no ideal age, five seems to be a common starting point (depending on when your child starts to understand the concept of money). In terms of amount, many experts suggest matching your child’s age with a weekly allowance; e.g., a five-year-old would get $5.

Open a bank account

Banks differ on when kids can open accounts, but many have children’s account programs designed to make banks less intimidating and encourage saving. For many children, opening their own account will be an important and memorable step in their path to adulthood, and they’ll begin to associate a sense of pride with their savings.

Be visual

Kids are visual learners, so it also helps to have a piggy bank kids can see and touch. Even a clear glass jar provides a good way to watch savings grow. Consider using more than one container so they can divide their money into categories like Spend, Save, and even Give, if charitable giving is a habit you’re encouraging.

Remind them that the tortoise wins the race

“Now” can seem like the only time-frame young children understand, but parents can teach them that a slow-and-steady pace can help them reach a goal. If your child sees something they want to buy, show them how many weeks of allowance it will cost them to purchase it. Discuss other things they might also want to spend their money on, or items they might have to forgo in order to buy the toy or treat they want. You could even help them draw up a very basic budget, so they can see how many weeks of saving an item will cost them.


Delaying gratification can be a hard habit for children to master. Consider matching a portion (or all) of what your child saves to make saving more attractive. It’s also a novel way to start teaching kids about the concept of interest and how bank accounts and investments can grow by being left alone.

Practice what you preach

Whether we want to admit it or not, children like to mimic the actions of their parents. Kids will pick up on whether adults are stressed or fight frequently over money. They see how their parents shop and note whether they tend to be impulse buyers or not. If you have a big purchase coming up, include your child in your approach to savings; show them your budget and how you’re putting money aside for a worthwhile item. Or put your own piggy bank out and let your child see how you put money aside at regular intervals.

No matter what approach you take to teaching your children about personal finance, the important thing is to start early, and ensure your kids know how to be smart with money.

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