Money: How parents can turn saving into child’s play

The humble piggy bank seems to be falling out of favour. Two years ago, 80% of kids owned a piggy bank, according to a survey by Halifax, but now that has slipped to 72%.

This doesn’t mean the younger generation is losing interest in saving money. Halifax’s research also revealed the percentage of children having pocket money paid straight into a bank account increased from 19% to 23%.

Also, 4% of tech-savvy children now ask parents to pay cash into pocket money apps. And, with kids netting an average £7.71 per week, any money saved could quickly add up.

Here are some tips to encourage your child into good money habits in 2020…

Start young

Halifax suggests that, with very young children, using a piggy bank or a savings jar can make saving fun as they can see the cash stacking up.

You can encourage them to handle different coins and notes, to help them understand their value.

Get them involved in the household budget

Talk to children about the different prices of items and special-offer deals as you walk around the supermarket. And, when the household bills come in, it’s an opportunity to explain all the different outgoings and how the family’s earnings are used to pay for it. Be sure to keep the conversation light.

Help them to set savings goals

A regular savings account that allows access from time to time could help.

Halifax found many children put money away towards hobbies and activities, with 32% saving for computer games, 27% for clothes, and 23% for toys.

But it’s not all for personal gain – with 17% reporting that their savings will be for gifts for other people.

Turn pester power into a learning opportunity

With Christmas almost here, children’s demands often become louder. But 87% of parents worn down by pester power manage to turn these situations into teachable moments, according to financial services provider OneFamily.

Most commonly, this involves asking them to work out whether they can afford it as part of their weekly pocket money (49%), talking about essentials having to be paid for first (39%), or encouraging them to budget and save up for a bigger purchase instead (34%).

Meanwhile, Neil Clothier, head of negotiations at Huthwaite International, says youngsters need to learn that life is about trade-offs and compromise. Parents might suggest: “We’ll get you the PlayStation, but you have to buy the games.”

Shop around for a suitable deal

There are many ways to help grow children’s savings, from pocket money apps to long-term accounts such as Junior Isas, where money is locked away until the child reaches adulthood.

Rachel Springall, a finance expert at Moneyfacts.co.uk, says: “Digital apps can take a lot of hassle out of putting aside pocket money for a child.”

Springall highlights a cash Junior Isa deal from Coventry Building Society which has 3.6% interest.

“Stocks and shares Junior Isas may be a more attractive alternative for savers prepared for a little risk and could outperform cash returns. OneFamily even pay a £30 thank you gift voucher when savers apply online,” says Springall.

“Seeking independent financial advice would be ideal.”