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What is a good age to start encouraging kids to save money?

Thinking about teaching your child some good financial habits but don’t know when or where to start? Here’s a short guide to help you teach your kids about saving.
What is a good age to start encouraging kids to save money?
Reading time: 6 mins

Teaching your kids about saving money is always a good idea as it’s an essential life skill. But it can be tricky to know when the best time to start is and how to approach it.

The last thing you want is for your four-year-old worrying about money!

Don’t overthink it

This is something that everyone can be guilty of – you know you need to do something, but you aren’t sure how to approach it.

If you keep thinking about it, you’re likely to come up with some complex and long-winded approach, but the simplest thing you can do is just jump straight in.

If you’re already thinking about encouraging your kids to save, then we can already assume that they know how money works and have a good idea of paying for things.

The right age to start saving

Everyone is different, and as such, there’s no definitive age to start teaching your child about saving, but research suggests that money habits can be formed from the age of seven[1].

According to the research, this is because seven-year olds have a good level of cognitive and social competence, so they’ll be able to apply logic and reasoning to the idea of saving.

However, as a parent you’ll know the level of responsibility and maturity of your child best and should alter that age as you see fit.

Some parents may choose to talk to their child about saving when they’re just four or five, while others may wait until their 10th birthday. There’s no right answer here, other than the best time to teach them about saving is when they are ready.

How to encourage your child to start saving?

While the way to teach your child to save may differ, they all have one thing in common – you need to give them money in order for them to save! And a good way to do this could be to give them a regular allowance.

Maybe you have them complete chores for a set amount of money, or you simply give them a certain amount each week. How you give an allowance is up to you, but if your child has a way of earning money then they’ll also have a way to save.

Possibly one of the easiest ways to teach them about saving is to show them that they need to wait to be able to buy something. This can be a surprisingly hard thing for people to learn, regardless of how old they are, as having a delay in receiving a reward can be very frustrating.

One way you could do this is to find something your child really wants – be that a new toy, an ice cream, or a film – that’s more expensive than their allowance.

If they want a teddy, that’s £5 and their weekly allowance is £1, then you can let them know they’ll be able to buy that teddy in 5 weeks. It’s probably worth starting with something that doesn’t require a lot of waiting – say something they could buy next week – and then building on this.

Moving away from physical money

Have you ever noticed how we keep giving children coins and notes when adults very rarely use them anymore? According to a study, 60% of parents are guilty of paying their children’s pocket money in cash[2], which means we could be teaching our little ones with an outdated currency.

As important as it is to understand physical money, moving away from it could be equally as important. So, maybe once they’ve mastered their piggy bank and understand how saving money works, it’s worth moving on to digital currency.

While we aren’t suggesting that you give your child access to your credit card, you could show them how your online banking works, or maybe setting them up with a Junior ISA so they can see their own savings pot.

One of the bonuses to a Junior ISA – besides being tax-efficient – is that your child can’t access the money until they’re 18, which gives them plenty of time to save and gives you lots of time to teach them good money habits.

Saving or investing?

Teaching your children to save is one thing but teaching them to invest could help give their savings even greater potential. If you’re interested, we’ve done a blog on how to explain investing to your children. This makes for a nice logical progression, while teaching them about some financial risks and helping to prepare them for the future.

You could also use it to teach your child about the benefits of starting to save or invest as soon as possible to benefit from compounding (where the money they put aside earns interest or profit that, if reinvested, could earn profit of its own).

Consider opening a Junior Stocks and Shares ISA

If you really want to get into how investing works, you can open a Junior Stocks and Shares ISA, and show them how their money can buy them shares in a huge range of different companies, as well as some other good stuff like bonds, property and commodities, like precious metals or oil.

With Wealthify, our simple to use app is designed so that everyone can understand what’s happening with their investments, easily seeing the ups and downs and what they’re invested in.

Taking this next step is simple and you can open an account in just a few clicks and teach your child the benefits of investing, using an award-winning investment team to research, choose, and make the investments for you.

Your tax treatment will depend on your individual circumstances and it may be subject to change in future.

Please remember the value of your investments can go down as well as up, and your child could get back less than what was invested for them.

Wealthify does not provide advice. If you’re not sure whether investing is right for you, please speak to a financial adviser.


1: https://www.moneyadviceservice.org.uk/en/corporate/habit-formation-and-learning-in-young-children

2: https://home.barclays/news/press-releases/2022/01/piggybank-boost--kids-set-to-receive-pocket-money-pay-rise-in-200/

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