Six tips to teach your children how to save
Six tips to teach your children how to save
Financial Health
April 26, 2016

Six tips to teach your children how to save

Want to help your kids develop lifelong savings habits? Here are suggestions to get started.

Although it’s not hard to interest kids in money, they usually focus on spending it as opposed to saving it.

To set your kids on the path to developing lifelong saving habits, consider these six suggestions I used with my own children (now 20 and 22):

Set up a savings account. While piggy banks are great for young children saving small amounts of money, savings accounts are a beneficial place for your children to keep their money. Wells Fargo’s Way2Save® Savings account has no monthly service fees for primary account holders under 18 (19 in Alabama), and can be opened with a minimum deposit of $25. Also, consider having your child participate in the Junior Agent® Saver Club, which offers fun games and educational tools to help children ages 5 to 12 learn the basics of savings.

Save a specific part of each allowance or paycheck. When my kids were 7 or 8, I started giving them each a weekly allowance (for chores around the house) and required that they save a specific amount every week. When they were in their teens and got jobs, we continued that habit, and they deposited a portion of each paycheck into a savings account.

Automate savings. If you have an account with Wells Fargo, you can automatically transfer part of your child’s allowance to their Wells Fargo savings account, or even create a savings matching program to encourage them to save more. And when your child is ready for a job, they will likely be able to set up direct deposit of their pay and automatically transfer a certain amount of each paycheck to their savings account. Savings will start to add up before your child knows it.

Make children accountable for decisions involving their money. While long-term savings are important, it’s also important for children to understand the value of saving for near-term purchases. When my kids were younger, they wanted to pick out a toy every time we went shopping. If it was using my money, they simply couldn’t live without that new item! But when deciding what to purchase with their own spending money — their saved allowance, birthday money, or money specifically intended for the shopping trip — they often decided to keep their money to save for something more significant.

“Talk to them about strategies that worked for you — and ones that didn’t.”

Make sure kids’ accounts keep up with their lives. Most kids ages 3-12 don’t have complex spending habits, so a savings account is probably all they need. But as your kids become teenagers, get jobs, and have their own expenses, you should consider opening a checking account to help them manage their money. The Wells Fargo Teen CheckingSM account comes with a debit card and no monthly service fee with online-only statements. Parents, or an adult, must be a co-owner and can set spending and ATM withdrawal limits, so I think of it as a checking account with “training wheels.”

Personalize your approach. Some kids are interested in saving their money from the moment they earn their first dollar, but some will need more encouragement and guidance. You know your kids better than anyone else. Talk to them about strategies that worked for you — and ones that didn’t — and don’t necessarily expect all of your kids to follow the same path to savings success. Managing money and building good savings habits are lifelong skills — finding a personalized approach that works with their personalities is a good way to set them up for success.

Of course, these tips are only a starting point, and you may find other effective ways to help your children learn to save. For more tools that will help you and your children develop healthy financial habits, please visit our Hands on Banking® website.

Wells Fargo Bank, N.A. Member FDIC.