Learning to save money as a kid is an important life skill. Because saving money is the biggest contributor to building wealth. Here are 11 tips for saving money as a kid and to inspire your savings habit.
Set Goals
1. Set a Savings Goal
Setting a savings goal can be a great motivator. Goal setting is all about breaking goals into manageable parts.
The first step in setting a savings goal is to determine what by choosing a goal, like saving to buy a bike.
Once your what is defined, add the why, how, and when.
- Why – Why do you want to buy a bike?
- How – How much do you need to buy the bike?
- When – When do you need to buy the bike by?
Using this framework will help you clarify your goals.
TIP: Did you know that having written goals makes it easier to achieve them? For your next saving goal, consider writing it down.
2. Create a Visual Aid
Making a visual aid of your savings progress or savings goal could be a fun educational project. A bar chart may be a savings visual if you love math. Making a vision board or poster would be enjoyable if you prefer the arts. Reward systems, like token boards and stamp boards, are also great for helping to make savings a habit. The only limit is your imagination.
3. Introduce a Savings Match
Forming savings habits from a young age will benefit you greatly as an adult. One way to nurture good savings habits is by participating in an incentive for saving, such as asking your parents to match a portion of your money saved. This motivates good habits and will prepare you to participate in 401K matching and other financial incentive programs when you’re older.
Make Money
4. Earn an Allowance
Earning an allowance can increase your savings potential. One of the easiest ways to increase your allowance is by doing household chores. Sweeping and mopping, tidying a room, cleaning the dishes, and mowing the lawn are just some ways to earn money. And there are countless things to do around the home. Begin by asking your parent or guardian how you can help around the house. Negotiate a fee for chores proposed, and complete them as agreed. And you’ll be on your way to earning more income.
5. Pursue Entrepreneurship
Do you have a strong passion or talent? Consider using your strength to make money through entrepreneurship, the art of selling products and services.
Maybe you love to bake. Open a cupcake shop.
Maybe you enjoy teaching. Begin offering tutoring services.
Maybe you’re really good at painting. Sell your work online.
You can enter entrepreneurship as a freelancer, someone who sells products or services, or as a business owner, someone who owns a business that sells products or services. Whichever path you choose, know that while entrepreneurship can be risky, it can also be very rewarding.
Consider Banking
6. Use a Piggy Bank
A piggy bank is a great way to help you start saving. It visually and physically showcases saving progress (who doesn’t love a heavy piggy bank) and helps develop a saving habit. Having different banks for each saving goal, such as saving for a toy, a laptop, or for college, also helps you prioritize your resources.
TIP: A piggy bank doesn’t have to be the classic pig. It could be any container, such as a jar or a small box. For extra fun, you could even make your very own custom bank.
7. Open a Savings Account
Opening a savings account at the bank is another way to begin saving money as a kid. It’s beneficial because your money is protected up to $250K, and you can earn interest on the account balance.
Banks offer a range of youth accounts depending on the child’s age. Many of these youth accounts have favorable terms such as no or low fees. The most common youth account type is the joint savings account. Under the joint account, the parent and the child are co-owners of the account. Learn more about opening a joint savings account.
Manage Expenses
8. Know the Difference Between Needs vs Wants
Knowing the difference between needs and wants is critical to managing expenses and building savings. A need is an expense that is required, such as housing, clothing, food, cell phone, and transportation. However, a want is an expense that is nice to have but not required for daily living, such as eating out, going to the movies, or buying a video game. Treating wants as needs increases expenses and decreases savings opportunities. Manage wants through delayed gratification, intentional spending, and budgeting.
9. Make a Budget
A written budget is one of the best ways to meet savings goals. A budget is a plan for how you will spend your money. It can cover savings goals and spending goals. Budgeting doesn’t have to take a lot of time. If you know your monthly income, you can budget in under 5 minutes with the 50/30/20 budget method.
Under this method, your monthly income is allocated into the following buckets:
- 50% for Needs
- 30% for Wants
- 20% for Savings
So, if you make $40 per month, you’d budget $20 for Needs, $12 for Wants, and $8 for Savings. Easy, peasy.
Shop Smart
10. Develop consumer skills
Spending money wisely involves developing consumer skills when shopping and at home. For example, using coupons, negotiating discounts, and comparison shopping can create opportunities to save money when shopping. Around the house, turning off the lights when you leave a room, not letting the water run too long, and recycling products can also contribute positively to saving money.
11. Consider low-cost and free alternatives
Sometimes, just pausing and thinking of low-cost or free alternatives can go a long way toward saving money. When it comes to food, bringing your lunch instead of eating out is a great example. Or if you love to read, checking out books from the library instead of buying online can also be a great alternative. Taking a walk in a park, instead of playing video games, is a great form of entertainment. There are countless alternatives. You can discover great resources and create enjoyable experiences with creativity and research.
Conclusion
There are many ways to save money as kid. From setting savings goals to managing income and expenses to using a bank, developing good savings habits will help you build wealth over time.
Apply one of the eleven tips and begin your savings journey today.