5 Fun Ways to Encourage Your Kids to Save

The phrase/abbreviation ‘YOLO’ has probably been uttered by your kids at one point by now. When it comes to money, this can go either way. You may only live once, but any time spent worrying about how you’re going to make it until next payday (allowance) is usually not worth whatever the piggy bank was broken open for.

Some people in the financial industry believe spending and saving habits are formed as young as age five. Some of us are spenders and some of us are savers. A lucky few of us have managed a balance of the two. So how do we help our kids understand that while it’s important to have fun and spend your hard-earned money on things you want, saving money is not only necessary, but advantageous?

1.  Open a Child-Oriented Savings Account. Piggy banks are fun, and maybe your child already has his money stashed somewhere safe and away from his siblings. However, that money could be accumulating interest, turning into even more money in a special savings account. It will most likely make your child feel like a grown-up to have his or her own bank account. Here are a few of the top children’s saving accounts available to Canadians, based on a $100 balance:

Children’s Savings Account at ING Direct.  Available to any child whose parent has an investment savings account with ING Direct, your child will accumulate 2% in interest, compounded daily and paid out monthly. This is a free account with an unlimited maximum balance. The restrictions – no cheques available and money cannot be withdrawn from an ATM or spent via Interac. This is not necessarily a bad thing since the idea is to keep the money in the account so that more money is made, not to spend it.

HSBC Premier Youth Savings Account. Available to children of HSBC Premier clients. The interest rate is 0.75%, also compounded daily (paid out monthly). There is a maximum balance of $25,000. While cheques are not available from this account, they do allow free withdrawals from any ATM and free Interac transactions.

Premium Growth for Youth at CIBC. We could not find any stipulation stating that a parent must be a CIBC client for this. The interest rate available is 0.50%, compounded daily and paid out monthly. The maximum balance is unlimited. Cheques are available and they allow free withdrawals from any CIBC ATM, and free Interac transactions. It will cost $1.50 to withdraw money from other banks’ ATMs.

2. There’s an App for that. Teachers and parents have been tricking kids into learning for years, by turning the lesson into a game. In the age of tablets and smart phones, we’ve probably all given our kids our phone or tablet to keep them occupied. Next time, let your son or daughter play a fun game that also teaches the fundamentals of saving, and why it’s fun to do so with one of these free apps:

Snoopy’s Street Fair. This is for kids aged 7+, but kids are so tech-savvy nowadays, your 5-year-old will probably figure it out before you do. This game inspires budgeting and entrepreneurship by helping Snoopy and the rest of the Peanuts to build a street fair for fundraising purposes. Your child will need to earn money to be able to add attractions and decorations, and will be able to make the decision whether or not something is worth investing in to make a profit.  There are some in-app features that must be paid for to unlock, but for the most part, it appears you can learn the lesson for free.

Kids Money. This app provides a simple calculator based on setting goals. For example, If your child is saving up for a new baseball mitt or bey-blade set, he can put in the cost of the item along with his weekly allowance earnings and the app will tell him how many weeks it will take to reach his goal.

Learning Money with Leo.  One of the few Canadian-specific money-saving apps available. RBC put this one out, and it’s great for kids as young as four to learn the value of money through mini games,  virtual sticker books, and even colouring.

3.  Keep a Money Magnet. Not all of us have iPads or smart phones. There are still plenty of fun games that can teach kids about the value of money, offline. To play the money magnet game, apply self-adhesive magnet to the back of various coins and stick them to the fridge door. Each time your child asks for a snack or drink (or anything really), ask her to pay you with a dime. Next time, make it a quarter. Another item could cost a nickel. Your child will learn the value of each coin and the lesson that you must pay for most items.

4.  Allocate denominations that encourage saving. If your child receives an allowance, break it up into two toonies and a loonie, rather than a five-dollar bill. This makes the decision to put part of it away much easier, as there will still be some money in their pockets. No allowance? Any birthday money or presentation can be cashed in and split up into multiple denominations before given to the child. It might take longer to get toward their savings goal, but it helps promote a healthy balance between spending and saving.

5.  Become Advertisement Critics. There are restrictions on advertisements aimed at children.  However, many elaborate claims are made on adult ads. In the age of PVRs, we usually skip over the commercials whenever possible. Try to take note of which ones make outrageous claims as well as those that are more subtle. This will work best on products you have around the home. Ask your child to really consider whether the product will be as effective as they claim, or if the same product with a different package could do the same thing. You may choose to purchase big name brands for reasons other than performance; however, teaching your child that money can be saved by shopping around for the best value via visual demonstration teaches critical thinking and encourages smart spending. Smart spending allows for money available for saving.

Filed under: All About the Kids by Jenna
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