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How to Save Money as a Child (Plus How Much to Save)

Help your child learn a critical money management life skill with these strategies for how to save money as a child.

Someone looking up “how to save money as a child” likely already knows the logistics of how a child can physically save money.

boy smiling, putting money into funky green piggy bank, text overlay "how to teach your child to save money"

You know – spend less than they bring in, then put that money into a piggy bank or savings account.

What you really want to know is how to get your child or teen to actually do it.

To actually not spend every dollar bill they get, and to put that extra money into savings…in a semi-consistent manner.

That’s what we’re going to cover today – strategies for how to get your child to save their money.

How to Save Money as a Child

There’s the logistics of how to save money as a child, and then there’s the “how” part.

Logistically, to save money your child will need to:

  • Have money to use
  • Spend less than the money they have
  • Set up a savings space (money jar, savings account, slot in their wallet, etc.)
  • Collect money in the savings space
  • Rinse and repeat

But how to actually get a child to save their money? Well, that’s where the difficulties come up.

Saving money for kids has its own challenges that adults trying to save money (or even teens trying to save money) won’t face.

For example, kids can face:

  • Inconsistent money coming in
  • Low income/money amount so it doesn’t go very far
  • Not knowing what saving money actually means, and that there’s more you can do with money besides spend it

And that’s what can make saving money for a child challenging.

Below, you’ll find specific tips that will help when teaching kids how to save money.

1. Make Sure they Have a Savings Account, or a Savings Space

In order for money to accumulate, it’s gotta have a place to live (otherwise you might find money crumpled up in the corner of their room).

Whether you’re ready for a savings account or not quite there yet, you’ll find a savings space solution below:

Psst: this article assumes that your child has money in their life to begin with. Is that not the case? Here’s an article on how to set up an allowance system, chores for money chart, and 19 summer jobs for kids aged 13 and younger.

2. Have them Start Small (from Week to Week) and Build Up

When kids are first starting out, saving money literally means they don’t spend all of this allowance, or this payday, in this week.

They have some of it left over for the following week (or month – however often they receive money).

That’s it. Seriously.

If your child has started to keep part of their money from one allowance to the next, then they’re on the right track.

You can then increase their savings capability by challenging them to set up a short-term savings goal for kids (that will take more than one allowance cycle, and less than one month to save up for).

Start small, and grow their savings/delayed gratification muscle over time.

3. Have them Save towards Something

If I told you that you would need to set aside 30% of your income for the next year, then your next question to me would likely be: “why” (followed by “who are you to tell me how to spend my money)?

Kids need a reason to save their money. And not a reason given to them, but one they create themselves.

SO, you can set up a rule that they need to save up a certain amount of money (that’s a reason that’s given to them), but within that rule, allow them some freedom to determine what they are saving it up for.

Such as how to save up for an iPhone as a kid.

4. Encourage them to Save Money

You’ll want to encourage your child to save money – especially since saving money can feel less fun than spending it.

In fact, I wrote an entire article on how to encourage saving money.

You can encourage your child to save money by:

  • Incentivizing them to save more money
  • Physically making it easier for them to save money
  • Showing them what it means to save money, and what it can do for them

For more specific strategies, check out this article on how to encourage saving money.

5. Deal with Competing Savings Priorities

If you want them to contribute towards something like buying their first car or college, then split their expected savings contributions.

You could say that they need to save 30% of their income towards XXX (the future expense you want them to contribute to), and then save another 10%-25% towards something that they get to decide – their savings goal.

That way, they still feel like they get to use their money for something they want, and they’ll self-discover the power of saving money by going through the process of setting and achieving a savings goal.

Next up, let’s talk about how much you should save as a kid.

How Much Money Should You Save as a Kid?

Let’s take a moment to figure out how much money a kid should save.

There’s no “right” answer here, so let me give you some guidance and ideas and you can figure out what aligns most with your money values and situation.

1. Set Up Percentages

One of the more popular ways to figure out how much your child should save is to set up money management percentages with them.

This means, you and your child would agree on what percentage of their money they should save, what percentage they should use towards needs (if you give them specific money towards like after school snacks or something like that), what percentage they should donate, and what percentage they can spend.

An example amount could be:

  • 40% to savings
  • 40% to spend
  • 10% to donate
  • 10% to save for Christmas spending on brother/sisters

Then, you help them to calculate these percentages for any money that comes in their lives – whether that be from chore commissions, birthday money, an allowance, mowing someone’s lawn, etc.

2. Use the Goal Itself to Drive the Amount

Take their savings goal, when they want to get it by, and how much they’ll need to save for it (their Target Amount). Then work backwards.

Show them how much they’ll need to save each week in order to get what they want in:

  • 1 month = XX% or $XX
  • 2 months = XX% or $XX
  • 3 months = XX% or $XX

Then, ask them to figure out what “saving intensity” they want to go after – low (so it will take more time to achieve) to high (it’ll take less time to achieve).

3. Mimic Mom and Dad’s Money Management

You could try to mimic adult life here, to set up their expectations about money management in general – I would likely do this as my child gets older.

For example, what percentage of your income do YOU get to spend on what you want each month? Figure that out.

Let’s say you earn $6,000/month, and $4,000 of that goes towards bills and $1,000 of that goes towards savings and retirement contributions.

That means that 67% goes towards needs, and 17% goes towards savings, leaving 16% to spend on what you want.

You could share these percentages with your child, and let them know that they’ll need to save as much as you are, and they get to spend what you get to spend.

Hint: since they don’t have “needs” to cover at this point? You would need to figure out how you want them to use that percentage. Do they get to spend part of that? Do they need to use it to save up for future needs, such as a car or college?

Is it Good to Save Money as a Child?

Finally, I wanted to touch upon whether or not it’s good to save money as a child. Like, what are the benefits?

Yes, it’s good for kids to start saving some money.

Notice how I say “some”?

Because to be honest, you don’t want to force your child to save so much of their money that there’s an elastic effect when they gain more control of it – meaning, they suddenly spring back in the exact opposite direction and spend everything and anything they can get their hands on to make up for years of unmet spending wants and desires.

And, you don’t want your child to save nothing at all – these are the formative years, and learning how to save money is a good money habit that will serve them for the rest of their lives.

Here are a few reasons why it’s good to save money as a child:

  • It grows their delayed gratification muscle
  • It builds their money confidence
  • It motivates them to want to learn more about money management
  • It builds their confidence about one day leaving the nest and being able to live independently

It’s interesting that how to save money as a child has much more to do with encouraging, leading, and incentivizing your child to save their money, and much less to do with setting up the logistics for them to actually save the money. So, get your banking system set up, and then use the techniques from above to help your child learn how to save money – before they leave the nest and them not being able to save money starts to hold them back.

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Amanda L. Grossman is a Certified Financial Education Instructor, a 2017 Plutus Foundation Grant Recipient, and founder of Money Prodigy. Amanda's kid money work has been featured on Experian, GoBankingRates, PT Money, CA.gov, Rockstar Finance, the Houston Chronicle, and Colonial Life. Read more here.

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