How to Develop a Savings Habit

As people get older, they commonly experience two financial regrets—learning how to save and developing a savings habit at a young age. Considering a 2022 Statista Research survey revealed that 39% of children aged 8-14 had a savings account and 29% had a piggy bank, it seems we could do more to encourage and teach our kids to save earlier in life.

The importance of savings

Young adults who do not have a savings account by the age of 18 are less likely to get one, but for those that do have a savings account, it is more likely they will have a more diversified asset portfolio later in life, according to a University of Kansas Study. From elementary through high school, more school districts are requiring financial literacy education in their curriculum. Some schools have partnered with local banks or credit unions to establish in-school savings programs (ISSP) where kids can deposit money, are incentivized to save, and when they leave elementary school, take their savings with them. In fact, a University of Nebraska study found that 66% of the ISSP participants opened a bank account before entering high school versus 27% of non-ISSP students.

While the data may support the importance of learning to save, it also shows that teaching children to save is not an impossible task. Creating an early savings habit will most likely give kids a head start toward achieving future financial goals and independence.


Teaching children to save in five lessons

Lesson 1 – Openly discuss the concepts of money and saving

Money should not be a taboo topic because finances will be a conversation for every life stage. Having ongoing conversations about the sources of money (income), how much things cost (spending), and how to budget are important tools for a financially savvy future.

Having financial conversations can lead to better decision-making and help teach accountability. Here are three ideas that can encourage family money conversations:

  • Include the entire family in financial discussions on important expenses and how everyday behaviors (such as leaving the TV on when no one is in the room) cost money.
  • As a family, develop a savings goal for something the whole family could benefit from and use a visual tool like a savings jar or a fill-in graphic so that everyone can see the progress and feel part of the larger goal.
  • Instead of saying, “We can’t afford it”, try saying, “That’s not how we choose to spend our money” or “We can’t buy it now, but let’s figure out how to save for it”. Approaching money conversations in a more positive way helps kids think about what they value and teaches them about patience with their finances.

Lesson 2 – Discuss where the child’s money will come from

For younger children, most “regular income” comes from an allowance. For some, the allowance may be a set amount with no strings attached, while other families may structure it as a base amount with an ability to earn more by performing certain chores for the family. Other sources of income might include monetary holiday gifts, babysitting, lawnmowing or even a summertime lemonade stand.

Take time to discuss where the child’s money will be saved, whether in a piggy bank or a savings account. Then together, open the account (or purchase the piggy bank), so your child is included in their savings journey.

If your child has a savings account, remember to include interest earnings as income. This Investopedia article is a great resource for a conversation about how interest works.

Lesson 3 – Spending money, wants vs. needs

Most kids are pretty sure they need everything, so this one might be a little tough to grasp. Needs are critical things meant to survive and include food, clothing and shelter. Wants are things that you would like to have but are not critical to survival.

Of course, there are some grey areas to this: yes, you need clothes, and no, you don’t need the latest designer clothes. This is a great opportunity for a conversation that could lead to a savings goal discussion whereby you (the parent) pledge a certain amount that you are willing to pay for a need and if the child wants something fancier, together, you can come up with a plan for them to save the difference.

Lesson 4 – Set a savings goal and keep track

A savings goal is something that you do not have the money for right now, but you would be able to buy it (or experience it) if you saved up. For the first savings goal, have your child decide on something that is obtainable and won’t take a very long time to save for (such as a new video game versus a ticket on Blue Origin). The point of this exercise is to demonstrate that if you set a goal and work hard towards that goal, you will be rewarded. Once the goal is determined, sit down and figure out how much money the goal costs and then try to estimate how long it will take to achieve it.

Whether the money is in a piggy bank or a bank account, it’s easy to keep track of how much is being saved. A notebook with deposit entries can sit next to a piggy bank or, if your child has a savings account, you can log in to the account and view the balance together online. American National Bank’s ANB Go app includes the Money Monitor tool where users can establish savings goals and view progress on the interactive dashboard.

If your child isn’t reaching their savings goal as quickly as they’d like, keeping an eye on savings progress together creates an opportunity to talk about what they can do to save more, where their money was spent and that it’s okay to sometimes adjust goals.

Lesson 5 – Be an example to the saver you are molding

Kids often emulate what their parents or guardians do. If it’s important to teach your child to save so they can be set up for greater financial stability or future decision-making, practice modeling the same behavior and habits you are teaching the child.

Contact us to open a savings account

Are you ready to start teaching your kids to save? Visit any of our more than 30 locations in Nebraska, Iowa and Minnesota, and we’ll be happy to help get them excited about saving.

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