Children and Saving

In today's debt-oriented society, more and more people are perceiving the act of saving to be a necessary part of a child's education. The benefits of saving money may seem obvious at first, but there is much more to this education than meets the eye. To properly teach 'saving money' to children is to instill an awareness of the potentials in them. This bigger picture shows money can encourage communication, inspiration, devotion, and responsibility. We as elders can properly teach children about saving by first observing that saving, sharing, and spending are the basic potentials available to anyone with money. Ultimately, these three concepts should be viewed with equal importance. Piggy banks are the best means for children to begin learning these attributes. Piggy banks help facilitate their awareness of saving by providing a physical place to store their money; also their funds are always available to them. Consequently, they begin to dream of goals for their funds, while also experiencing immediate gratification for each coin added to their savings. Children who save inevitably learn the rewards of sharing, because they discover they have the power of choosing to share with others. The bottom line is that children need the power to freely spend, save, and share in order to gain a responsible understanding of money.

What piggy banks offer children that bank accounts do not:

Kids love receiving money, but not if it goes into an untouchable savings account they can only hear about. We all prefer for our children to spend their money wisely instead of on candy for example, but responsible saving can not be taught by cutting off their freedom to spend. Tragically, when parents place all their children's money directly into a bank account, the children begin to assume that their money is really intangible, and should be spent immediately while they do possess it--a perspective that often survives into adulthood. The missing link in a child's financial education is an incentive. Grown-ups receive a form of incentive from their bank, called interest, but conversely a child's education is lacking unless this aspect of saving is also experienced by them first-hand. Piggy banks are valuable for children's monetary education, but ultimately incomplete without an interest rate to inspire their saving. Children will surely squander their money until they experience a benefit of saving it, and an interest rate fulfills this need. Parents can initiate a monthly or weekly interest rate on their children's piggy bank savings. Allowance, monetary gifts, even found change should all be considered a part of the program. Granted, children will require an interest value high enough to hold their attention, but the ultimate result is a money-smart child who makes his or her parents proud. With their own piggy banks coupled with an interest incentive, children will eventually become enlightened to the virtue of saving, and thus be miles ahead in the game of understanding finance. Remember, the extent of a child's financial knowledge will directly determine the manner in which they experience it for themselves.