7 Proven Ways to Teach Savings Skills
As a finance niche blog writer, I have seen countless people struggle to save money. Whether it be due to lack of knowledge or self-control, saving money can be a difficult task.
Fortunately, there are proven ways to teach savings skills that can help people of all ages and backgrounds improve their finances.
In this article, I will provide seven actionable techniques to teach savings skills, along with real-life examples and data to back them up.
1. Start early with savings accounts
One of the most effective ways to teach savings skills is to start early. Encourage children to start saving at a young age by opening a savings account for them. This instills the habit of saving and helps them develop financial goals.
According to a study by the National Endowment for Financial Education, children who save regularly are more likely to continue saving as adults.
For example, Bank of America offers a Junior Savings Account that allows parents to open savings accounts for their children with no minimum balance requirements, providing a great start to children’s savings skills.
2. Set savings goals
Setting goals is a crucial component of teaching savings skills. It helps instill the motivation and discipline necessary to save money consistently. Encourage individuals to set achievable goals for themselves, such as saving for a down payment on a house, vacation or emergency fund.
Data from a study conducted by the American Savings Education Council shows that individuals who set specific savings goals are more likely to save money.
For instance, a young couple in their 20s can set a goal of saving $500 per month towards their emergency fund.
3. Emphasize the importance of reducing expenses
Reducing expenses is another key strategy for teaching savings skills. A study conducted by TD Bank found that 54% of millennials reported cutting back on their expenses to save money.
Encourage individuals to take a hard look at their expenses and cut back on unnecessary spending. For example, one can save by opting for a cheaper cell phone plan, cutting down on dining out, or by skipping expensive daily coffee runs.
4. Make use of automated savings tools
Automation can be a powerful tool in teaching savings skills. It helps individuals save money regularly without having to think about it. According to Capital One, individuals who use automated savings tools are three times more likely to save money consistently.
For instance, several investment apps like Robinhood, Fundrise, and Acorns offer round-up options that invest change from day-to-day charges to long term savings.
5. Play games that teach savings
Games can be a fun and interactive way to teach savings skills. Several board games and mobile apps are available that can teach individuals financial literacy while still keeping them entertained. For example, The Game of Life teaches financial literacy in different life contexts.
Another example is AceMoney Lite, a personal financial management software that teaches finance through a game.
6. Set a good example
Leading by example is another great way to teach savings skills. Adults who demonstrate good financial habits can help children develop the same habits. A survey by the National Foundation for Credit Counseling found that 71% of adults admitted that their parents influenced their financial habits.
For instance, by demonstrating frugal habits, saving for desires or emergencies, or pacing loan repayments, adults can lead by example and ensure good financial habits among children.
7. Teach personal finance in school
Personal finance classes in school can be an effective way to teach savings skills. Several subjects such as mathematics, economics, social studies, and statistics can teach useful lessons in finance.
Junior Achievement is an organization that teaches financial literacy and work readiness through hands-on experiential learning programs that begin in elementary school.
Q: What are savings skills?
A: Savings skills refer to the ability to budget and save money for future uses.
Q: How can I teach kids to save money?
A: Teaching kids to save money can be done by opening savings accounts, setting goals, reducing expenses, and leading by example.
Q: What are some automated savings tools?
A: Automated savings tools include round-up options from investment apps like Robinhood, Fundrise, and Acorns.
Q: What are the best games that teach savings skills?
A: Some of the best games that teach savings skills include The Game of Life and AceMoney Lite.
Q: How do personal finance classes help in teaching savings skills?
A: Personal finance classes in school can teach useful lessons in finance, such as budgeting, saving, and investing.
7 Proven Ways to Teach Savings Skills
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