Why We Save

Men holding daughter on shoulders

Dreams and uncertainty. That’s the simple answer to why we save.

But, how do you convey that to a child when they barely understand the concept of money?

Part of it is being truthful with them about some money matters. But a bigger piece is displaying and explaining the financial choices you’re making, no matter how big or small the decision. If you go to the bank to deposit some money in savings, then explain what you’re saving that money for.

In a broad sense, you’re saving money generally for two reasons:


Everyone has dreams of where they want to live, the type of house they want to build, the places they want to travel, etc. But, without savings, you can’t do any of these things.

So, start talking to your children about their dreams. Talk about dreams they have right now, like do they want to go to the pool for their birthday or do they want to buy something special on vacation. Ask about their long-term dreams as well.

Do they want to go to college? Do they want to have a car when they get their license? What kind of job do they hope to get? Talk about how all these things will take money, and how when you have dreams you have to think ahead and save money so you can achieve them in the future.


When your child isn’t paying medical bills and has never worked a job, it can be hard to explain the concept of financial uncertainty. But, this is where a large portion of savings goes for the average family.

One way to explain this is to talk to your child when you must dip into your emergency fund, like if unexpected medical situations come up, or your car needs to be fixed. Talk to them about how these are expensive so you sometimes have to dip into savings for the things you can’t really plan ahead for but still need.

Another great exercise when you’re teaching your kids about saving is to make sure they first understand the difference between a need and a want.


Here are some action items to help your child understand the why and how of saving money:

  1. Establish a set amount they should save every time they’re given any money.
    Many families decide on a percentage, like 10 or 20 percent, that should be saved.
  2. Discuss your child’s dreams.
    What do they want to do in the next month, year, and when they get older?
  3. Establish savings goals.
    From your discussion about dreams, set some tangible short-term goals (if they’re in high school, set long-term goals, too). This will show them the reward of saving at an early age. You might want to start with a goal that’s only a few weeks away and give them opportunities to save to achieve that goal. Or, you might want to set up savings categories for them like you may do in your own budget. You can have their savings set aside for different things, a portion going to a college fund, a portion going to a car fund and a portion going to a short-term goal they’ve decided on.
  4. Bring them to the bank!
    Have them deposit the money in the bank themselves. Show them the process and as the money grows, let the bank clerk talk to them about the interest their account is earning. It’s just another way for them to see the benefits and process of saving money.

Sometimes it’s hard to save money because of growing financial burdens, but it’s important that you explain savings should always come first before you buy a “want.”

Talk with them about some of the sacrifices you have made to save money. Help them understand the concept of how money should be used: pay for needs first, save money, and then buy things you want.

If you’re searching for the best savings account for you or your child, look at your options with First Kentucky here!