Teach Your Child to Save Money

Every parent hopes to witness their child thrive. However, in today’s constantly changing global economy, prosperity extends beyond academic accomplishments. It is deeply rooted in financial literacy. The financial groundwork we set for our children can shape how they manage life’s financial challenges and successes. South Africa, with its diverse blend of cultures and traditions, possesses its distinct economic dynamics.

Key Takeaways

  • Introducing children to the formal financial system by opening their first bank account can set them on the path to becoming astute money managers.
  • Creative challenges such as the ‘Coin Jar’ Challenge and Monthly Saving Goal Chart can make saving enjoyable and instill discipline.
  • It’s crucial to address the influence of peer pressure and societal spending trends, teaching children discernment and the ability to assess value.
  • A comprehensive approach to money involves understanding its essence, achieving financial milestones, and equipping children with the right mindset to confront real-world financial challenges.

Laying the Foundation: Instilling the Value of Money

Wants vs. Needs

Every visit to the toy store or a browse through an online gaming platform brings this dilemma to the forefront. A toy or game is a want, while school supplies or basic nourishment are needs. By teaching our children to differentiate between the two from an early age, we equip them with a discernment that’s crucial for future financial decisions. Engage in discussions after shopping trips or during family budget planning sessions. Ask them to classify items into these two categories, allowing them to naturally grasp the distinction.

Allowances and Chores

The concept of earning is fundamental. By linking money to work, we convey the lesson that money isn’t simply handed out; it’s earned. Introduce a system of chores and allowances in your home. Maybe tidying their room earns them a certain amount, or perhaps helping with the dishes garners a bit more. This system not only educates them about the relationship between work and money but also fosters a sense of responsibility.

Open Their First Bank Account

Benefits of a Kid’s Savings Account

Beyond the sheer delight and sense of maturity, owning a bank account can impart several valuable lessons to a child. They begin to comprehend the formal financial system, from depositing money to observing their savings accumulate interest. This experience offers them a practical insight into how the financial world operates. As they continue to make deposits, withdrawals, and check balances over time, they’ll gain a grasp of managing their finances, setting them on the path to becoming savvy money managers in adulthood.

Top Banks in South Africa for Children

South Africa offers numerous banks that provide child-friendly accounts, each with its own set of advantages. For instance, Standard Bank’s Sum1 account is tailored for young individuals up to the age of 16 and offers competitive interest rates. On the other hand, ABSA’s MegaU account boasts a fun debit card design and allows children to learn about transactional banking from as early as the age of 16. Consider your local options, and the benefits they offer, and perhaps even turn a visit to the bank with your child into a financial adventure.

Making Saving Fun with Creative Challenges

The ‘Coin Jar’ Challenge

Sometimes, starting with the basics can be the most effective approach. Enter the ‘Coin Jar’ Challenge. This enjoyable and hands-on activity can be introduced to even the youngest of savers. The concept is simple: each time your child receives coins, whether from change, as a reward, or any other source, they place them into a dedicated jar. This tangible representation of saving can be quite thrilling for children. As the jar gradually fills up, they’ll have the pleasure of watching their savings grow right before their eyes. The weight and the sounds of coins clinking all contribute to making the act of saving a real and satisfying experience. After a set period, perhaps once a month, take the time to count the coins together. This exercise not only reinforces the idea of accumulation but also provides a practical math lesson.

Setting Up a Monthly Saving Goal Chart

Next, let’s enhance their motivation with a Monthly Saving Goal Chart. This is a more structured challenge that promotes the discipline of consistent saving. On a large sheet of paper or board, draw out a calendar for the month. Set a savings goal for the end of the month. It could be a toy they’ve had their eye on, a book, or even a fun day out. Every day, they should mark how much they’ve saved. Colourful stickers or doodles can make this even more engaging. By the end of the month, if they’ve achieved their goal, they not only get the reward they were saving for but also the unmatched pride of reaching a set goal.

» Read more: Essential Tips to Kickstart Your Savings

Teaching the Power of Compounding Interest

Now, let’s explore a topic that even many adults find perplexing: compounding interest. At its core, compounding interest results from reinvesting interest instead of paying it out, so that interest in the next period is earned on the principal sum plus the interest accumulated previously. For a child, think of it as their money “making baby money.” Imagine they save a certain amount, and it grows a little because they’ve kept it safely in a bank. Now, the next time, not only does the original amount grow, but the little extra that was added also grows. This snowball effect can cause their savings to increase much faster than they might expect.

Tools and Apps for Demonstrating Compound Interest to Kids

Luckily, for today’s tech-savvy youngsters, various tools and apps are available to simplify this concept in an engaging way. One such tool that is prominent in South Africa is the Compound Interest Calculator designed especially for children. It presents, in vibrant graphics, how their money multiplies over time, offering a projected figure based on their saving habits. This visual representation makes the abstract idea of compounding tangible, fostering a deeper understanding and an appreciation for patience in the savings journey.

Embrace Digital Tools and Apps

In the digital age, numerous opportunities emerge to make finance more accessible and understandable for young individuals. South Africa, being a tech hub in its own right, offers a multitude of apps designed for money management among children. Apps like Kidz Banking from Standard Bank add an interactive twist to banking with gamified challenges. Another noteworthy app is Piggy Bank, which educates children about budgeting, saving, and even introduces them to charitable giving. These platforms are customized to engage, educate, and instill responsible money habits from an early age.

Promoting Safe Digital Practices in Online Banking

While the digital realm offers unparalleled convenience and learning opportunities, it’s essential for our children to navigate it safely. Ensure that their apps include robust security features, keep them updated regularly, and educate your child about the fundamentals of online safety. This entails not sharing passwords, logging out from shared devices, and recognizing suspicious activities or requests. By incorporating these practices as they interact with online banking and financial apps, you’ll establish a foundation for a lifetime of secure and responsible digital transactions.

Incorporate Money Discussions in Everyday Life

Picture this: you’re strolling through the supermarket aisles with your child. Instead of treating it as a mere chore, turn it into an enlightening experience. Engage your child by comparing prices of different brands, keeping an eye out for discounts, and understanding the value of buying in bulk versus individual items. Ask questions like, “Why do you think this product is priced higher?” or “Can we find a better deal elsewhere?”. Before heading to the store, set a budget. Involve your child in tracking expenses as items are added to the trolley. It’s a straightforward yet impactful way to grasp the concept of living within one’s means and the importance of making informed choices.

Planning Family Holidays: Allocating a Budget and Sticking to It

Dreaming of a holiday by the serene South African coast or an adventurous safari trip? Get your child involved in the planning phase. Allocate a certain budget for the holiday and explore options together. Whether it’s choosing between luxurious lodges or budget-friendly accommodations, or deciding on activities, it’s an excellent way to teach priority setting and financial discipline. It not only fosters responsibility but also builds anticipation and appreciation for the upcoming trip.

The Influence of Peer Pressure

We live in an era dominated by social media and a constant barrage of advertisements. For children, this often translates into a continuous stream of ‘wants’, driven not by necessity but by what their friends have or what they see online. By acknowledging and addressing this, we can help them differentiate between genuine desires and fleeting fancies shaped by external influences.

Strategies to Manage and Overcome the Urge to ‘Keep Up’

Open dialogue is the key. Foster an environment where your child feels comfortable discussing their feelings related to peer pressures. Use real-life situations or stories to illustrate the pitfalls of succumbing to societal pressures. Offer alternatives: instead of purchasing the latest gadget, how about investing in a skill or experience? Remember, it’s not about curbing desires but about teaching discernment and assessing value.

Setting Realistic and Achievable Financial Goals

Every journey begins with a clear destination in mind. This principle also applies to financial aspirations. The initial step in nurturing a savings culture in your child is helping them establish tangible, realistic financial goals. Just like all of us, children need direction, and they need to understand the ‘why’ behind saving.

Differentiating Between Short-Term and Long-Term Goals

Start by categorizing goals into two distinct groups. Short-term goals might include saving for a toy, a book, or a special day out. These are goals that can be achieved in a few weeks or months. On the other hand, long-term goals might revolve around pricier items, such as a bicycle or even their future education. It’s crucial for children to appreciate the satisfaction derived from achieving both these types of goals and understand the different timeframes and efforts required.

Implementing Reward Systems for Achieving Set Goals

Let’s admit it; we all appreciate a bit of motivation. Introducing a creative reward system can work wonders. For example, for every Rand saved, you could match it with a certain percentage. Alternatively, once they reach a savings milestone, they could receive a little extra reward to further motivate them.

Introducing the Concept of Investments

Traditional community savings schemes, such as stokvels, are a cornerstone of South African culture. They can be a great method for children to understand the importance of collective saving and investment. In these arrangements, families come together to pool their resources towards shared goals. Even participating in such a group, even passively, can provide them with firsthand experience of the benefits and challenges of shared financial commitments.

» Learn more: Master the Art of Money Management

The Role of Parents: Leading by Example

Children, being keen observers, often mimic the behaviors they witness at home. Your relationship with money serves as their guide. The lessons you convey through your actions often have a more significant impact than any words ever could.

Demonstrating Good Financial Habits to Children

Show them how you budget, save, and spend responsibly. Perhaps involve them in household financial decisions occasionally, such as planning the monthly grocery list within a predefined budget. Your practices offer them practical lessons they can learn from.

Initiating Open Conversations About Family Finances

Demystifying money discussions can alleviate any anxieties they might have. When they ask questions, answer them honestly, using language suitable for their age. Your transparency can instill confidence in their financial journeys.

Building a Relationship with Money

The cornerstone of any robust relationship is understanding and respect. Similarly, the connection one forges with money must be grounded in these values. It’s not only about amassing wealth but also about comprehending its true essence.

Milestones in Achieving Financial Independence

Converse about the various stages of one’s financial journey, from receiving pocket money to earning their initial salary and eventually reaching a point where they can independently sustain themselves comfortably.

Preparing for Real-world Financial Challenges

More than just the mathematics of money, it’s the attitude towards it that determines financial well-being. Equip them with the right mindset. Encourage them to ask questions, to be inquisitive, and to be in a continuous state of learning. This proactive approach will guarantee that when they encounter the world, they’ll do so not only with a wallet but also with wisdom.

Preparing for Adulthood Expenses

As our children mature, the impending reality of adulthood and the associated expenses begins to cast its shadow. One of the significant costs that many South Africans encounter is the expense of university education. From tuition fees to accommodation, books, and other learning materials, these costs can quickly accumulate. Then, there’s the excitement of that first drive. Obtaining a driver’s license, purchasing that first car, and the related expenses of maintenance, insurance, and fuel – all can place pressure on finances. Moreover, living independently brings its own set of costs: rent, utilities, groceries, and occasional leisure activities.


Within the diverse fabric of South Africa’s distinctive culture and economic environment, equipping our children with robust financial literacy stands as a top priority. Beyond the fundamentals of arithmetic and counting coins, it’s about instilling discernment, responsibility, and a healthy respect for money. From understanding the distinction between wants and needs, embracing the discipline of saving, to the nuanced realms of investments, the journey of financial education is an ongoing one.

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What is the significance of teaching children the difference between ‘wants’ and ‘needs’?

Teaching children to distinguish between ‘wants’ and ‘needs’ equips them with the essential discernment required for future financial decisions.

Why should I consider opening a bank account for my child?

Opening a bank account for your child introduces them to the formal financial system. They learn about deposits, withdrawals, and the concept of interest. Over time, they’ll develop the skills to manage their finances, setting them on the path to becoming proficient money managers in adulthood.

How can I make saving money engaging for my child?

Introducing activities like the ‘Coin Jar’ Challenge or setting up a Monthly Saving Goal Chart can make saving fun and tangible for children.

Are there digital tools in South Africa that can assist in teaching children about money?

Yes, South Africa offers various apps tailored for children’s financial education. Apps like Kidz Banking from Standard Bank gamify the banking experience, while Piggy Bank educates kids on budgeting, saving, and charitable giving.

How can I lead by example when it comes to financial literacy?

Children often emulate the behaviors they observe. Demonstrate good financial habits, engage in budgeting, save responsibly, and include them in occasional family financial decisions.

How much do you need?
*Representative example: Estimated repayments of a loan of R30,000 over 36 months at a maximum interest rate including fees of 27,5% APR would be R1,232.82 per month.

Loan amount R100 - R250,000. Repayment terms can range from 3 - 72 months. Minimum APR is 5% and maximum APR is 60%.