How to Save Money as a Kid
Saving money as a kid might seem tricky because you have limited sources of income, in comparison to adults. However, you also have fewer expenses. Examine how you spend money to figure out how to increase your savings. Following a savings plan is critical to growing your money. But if you make a mistake and spend too much once in awhile, don't feel upset with yourself. Get back on your savings plan and learn from your experiences. Making mistakes and learning from them is an important part of managing your money more wisely in the future.
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Instructions
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Brainstorm a list of all of your financial goals. This might include buying a new bike, going out to the movies with friends and saving for college. Divide the list into your short-term goals and long-term goals. A short-term goal is buying a bike. A long-term goal is going to college, buying your first car or getting an apartment after college.
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Write down how much money you typically receive each week. This might include your allowance, money from doing chores or income from a part-time job. Make a weekly savings and spending plan for all of your income. From your total income, subtract a set amount to save and an amount to spend. When you receive your money, always pay yourself first. That is, put a portion into savings before you spend any of it.
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Divide your savings money. Set aside one portion for your short-term goals and one portion for your long-term goals. You might use two different envelopes for your separate savings. Keep them in a secure location in your home.
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Shop around for a savings account. As you accrue money in your savings envelopes, periodically deposit your long-term savings in a bank or credit union so that it can earn interest. Many banks offer no-fee savings accounts for kids. Ask your parents for help opening a bank account.
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Make a savings chart to show your progress and motivate yourself to save even more money. Write down the amount you successfully save each week and post the chart in a visible place, such as your closet door.
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Challenge your siblings or friends in a "savings race." Determine an amount of money to save and see who can save that much first.
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Check out college investment options offered by the federal government and your state government. Some investment plans intended solely for college may offer you tax breaks or other savings help.
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Consider other long-term investment plans like mutual funds or savings bonds. Savings bonds tend to offer higher interest rates than savings accounts from a bank, but you must keep the bond for a set amount of time (perhaps 10 years) before redeeming it. When you invest in a mutual fund, a financial manager invests your money and other people's money into a variety of investment plans. Talk to your parents about these options.
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Tips & Warnings
If you are saving for a specific item, post a picture of that item in a visible place in your room to help you stay on track.
If you are saving for college, increase your chances of earning a scholarship by getting good grades, volunteering in your community and joining after-school clubs.
References
- Kidzworld: How to Save for Something Big
- University of Kentucky Cooperative Extension Service; Teaching Your Children Good Savings Habits ...; Raymond Cox
- 101 Ways to Save Money; The Top 7 Tips on How Kids Can Save Money ...; Rachel Incoll
- Federal Deposit Insurance Corporation; Start Smart - Money Management for Teens; August 2006
- Agora Financial: Teaching Your Kids Saving Across the Lifespan
Resources
- Photo Credit Comstock/Comstock/Getty Images
