In the late 1960s Walter Mischel, a prominent American psychology professor, devised an experiment to test a child’s ability to delay gratification. He gave children a marshmallow and told them that if they waited and didn’t eat it, they’d get another. Some kids ate it straight away, while others created ingenious ways to distract themselves from the sugary treat in front of them.
But it’s what happened next that was most interesting. The children were tracked for decades and those that waited were found to perform better academically, earn more money, and be healthier, and happier. This principle of delayed gratification is the same thing behind teaching kids to save money. And kids can understand this as young as five or six.
Learning to wait
But as a parent you shouldn’t worry if you have slightly impulsive kids – that’s natural. Kids can learn to wait for things. And obviously learning to wait is a fundamental part of learning to save. Here we outline four different tips and tricks to help in teaching kids to save money.
Making tough choices
If your child wants an expensive item encourage them to plan how they will pay for it. This could involve asking for birthday money rather than gifts, earning more cash by doing extra chores or saving more of their pocket money. Help them to do some sums to work out how much they need and how long it will take to save it.
Match their savings
A good way of encouraging saving at any age is to reward your kids, either by matching what pocket money they put aside or agreeing to put something towards it. It is a soft introduction to the idea of earning interest on savings and pensions in later life. When they are older you could get them to monitor the interest on their online bank account each month to check they are getting a reasonable interest rate.
It’s a good idea to impress upon children the importance of looking after their hard-earned money. You can start by helping them to store it in a safe place when they receive it, both physically and digitally. You could start by taking them to the bank to pay it in or setting up their Pigzbe account with them. Why not help them to pick a password for their Pigzbe account? Once an account is set up, it’s good to show them that their pocket money has gone into their account via the Pigzbe app.
Use real world examples of people who have benefited from saving. You could tell them the story about a neighbour or friend who saved some of their salary for years in order to buy their new car/boat/house/around the world trip.
Teaching kids to save money with Pigzbe
With Pigzbe, children learn to save in the child’s app with the help of the Pigzbe Money Tree. Everytime a new task is completed in the Pigzbe pocket money app, or a gift or a recurring allowance comes through, their money tree grows. It’s a simple but engaging visual metaphor that helps kids make digital money less abstract for kids. It’s fun too! The more you nurture your savings, the bigger and more beautiful your money tree gets.