The Maths of Saving: A Powerful Guide to Maximising Piggy Banks and Allowances

Avatar of Michelle Connolly
Updated on: Educator Review By: Michelle Connolly

Understanding the basics of saving money is an essential life skill that we can begin to develop in children from an early age. Piggy banks, though a simple concept, play a significant role in teaching children about the value of money and the importance of saving. They enable kids to physically see their savings grow, which can be incredibly rewarding and incentivising. This tangible aspect of money management is often a child’s first exposure to financial literacy and sets the foundation for more complex concepts as they grow older.

A piggy bank sits on a shelf, filled with coins. A child's allowance jar sits next to it, labeled with "savings."
The Maths of Saving: Piggy banks

Allowances are another practical tool for instilling financial responsibility in children. By providing a set amount of money on a regular basis, children can learn to budget and make decisions about how to spend and save their money. It’s through allowances that they often face real-world financial choices for the first time, deciding between immediate gratification and saving for larger goals. As children grow and their mathematical skills improve, they can be introduced to savings accounts and the concept of interest, which further enriches their understanding of how money can work for them.

Key Takeaways

  • Piggy banks serve as a visual and practical introduction to saving and financial literacy for children.
  • Allowances teach children to manage their money and understand the consequences of their spending choices.
  • Introducing savings accounts and the concept of interest to children complements their financial education as they advance in age and understanding.

The Role of Piggy Banks in Financial Education

Piggy banks have played a traditional role in teaching children the importance of saving money. They act as physical tools for financial education, providing a tangible way for youngsters to learn about and understand the value of money.

Types of Piggy Banks

We find piggy banks in various forms, from classic ceramic models to durable metal and flexible plastic versions. Ceramic piggy banks often come in colourful designs that appeal to children, whereas metal piggy banks might be more robust, withstanding the occasional tumble. Plastic variants offer a lightweight and sometimes transparent option, allowing children to watch their savings grow over time.

  • Ceramic: Colourful, traditional, but fragile.
  • Metal: Robust, heavy, often with intricate designs.
  • Plastic: Lightweight, sometimes transparent, durable.

Advantages of Using Piggy Banks

Using piggy banks to save coins presents several advantages. Firstly, they serve as a practical demonstration of the accumulation of wealth; children can physically see their money pile up as they add more to their piggy bank. Secondly, piggy banks offer a safe place for children to store their money, helping them resist the temptation to spend it immediately.

  • Visual Saving: Watch savings grow coin by coin.
  • Encourages Discipline: Teaches delayed gratification and saving over spending.

By engaging with piggy banks, children can learn key aspects of financial education, such as the concept of saving and developing a habit of patience when it comes to money matters. Handling a piggy bank reinforces the value of each coin saved, laying the foundation for money management skills that they will carry into adulthood.

Setting Savings Goals for Children

Before we delve into the intricate world of children’s finance, it’s paramount to grasp the importance of savings goals. It’s a stepping stone towards financial literacy, enabling kids to comprehend the value of money and the benefits of saving.

Importance of Goal Setting

Setting savings goals is crucial for young minds as it teaches them the intricacies of financial planning and the significance of working towards long-term objectives. By establishing clear goals, children learn the art of patience and the reward of delayed gratification. Encouraging a goal-oriented mindset early on paves the way for responsible money management in the future.

Helping Children Identify Their Goals

First, we must assist children in pinpointing what they wish to save for. Whether it’s a toy, a book, or an event, identifying tangible goals makes the process of saving money more relatable and achievable for a young child.

  • Short-term goals might include a new book or a small toy.
  • Long-term goals could be a video game console or a bicycle.

Secondly, let’s chat with the kids about the relevance of each goal, how long it might take to reach it, and what steps are necessary to get there. By breaking down the process, we make goal setting a manageable task even for the littlest of savers.

For example:

  1. If the goal is a toy costing £10 and the child receives £1 weekly, it would take 10 weeks of saving.
  2. If the goal is a bicycle costing £100, with the same weekly allowance, it will take 100 weeks, suggesting a need for additional saving strategies.

Through platforms like LearningMole, we can provide children with engaging educational content that not only focuses on mathematics but also encompasses essential life skills like financial literacy. With resources tailored for young learners, we can make teaching about savings and allowance an enjoyable experience. Engaging with such interactive content further solidifies their understanding and application of these financial concepts.

Allowances as a Tool for Money Management

We recognise the importance of teaching kids about financial responsibility from a young age. Allowances can be an effective tool in guiding children to understand money management, distinguishing between needs and wants, and making wise spending decisions.

Determining Allowance Amounts

When we set an allowance for our children, it’s crucial to consider their age, understanding of money, and what we expect them to pay for with their own money. The allowance should be enough to cover their needs, with a little left over for their wants. It’s a delicate balance where we need to ensure the amount is not too meagre, making it impossible for them to save, nor too generous, which might deter them from learning the value of money.

Teaching Savings Versus Spending

Instilling the habit of saving is just as important as teaching sensible spending. By introducing the concept of budgeting, we help children allocate their allowance into saving and spending categories. Savings should prioritise future needs or goals, which teaches planning and delayed gratification. For spending, it’s vital to help them understand the boundary between necessary and optional expenses. Encouraging them to make considered choices leads to better money management skills.

Using allowances as a tool for teaching money management paves the way for our children to become savvy about finances. It allows them to practise budgeting in a supportive environment, establishing a foundation for strong financial habits in the future.

Understanding Savings Accounts and Interest

Saving money is a fundamental step toward financial responsibility. In this section, we’ll teach you how banking systems work for children and how saving money can grow through interest.

Introduction to Banking for Kids

Banking can be quite an adventure for children. We often start with a simple piggy bank, but as we grow, a savings account becomes the next step in our journey of financial education. A savings account at a bank is not just a place to stash our cash; it’s a secure spot where our money can earn more money over time. It’s like our piggy bank, but better. The bank pays us for keeping our wealth with them—it’s their way of saying ‘thank you’ for letting them use it.

How Interest Works for Savings

Now, let’s tackle the magic ingredient that makes our money grow: interest. Interest in the context of a savings account is the extra money the bank pays into our account. Think of it as a small ‘bonus’ that accumulates over time. Let’s break it down: if we have £100 in our account and the bank offers a 1% annual interest rate, by the end of the year, we’ll have an additional £1, making our total £101. Interest can be:

  • Compounded: Calculated frequently (daily, monthly, yearly), with each interest payment based on the original amount plus any previous interest earned.
  • Simple: Calculated at a set rate on the original amount for a set period.
Type of InterestCalculation BasisPayment Frequency
CompoundedPrincipal + Earned InterestVaries (often yearly)
SimplePrincipal Amount OnlyTypically Annually

Understanding interest is crucial as it influences the growth of our savings and helps lay the groundwork for future financial success, such as planning for our income and wealth management. With the right banking knowledge, we’re setting ourselves up for a prosperous future.

Learning to Budget and Prioritise Spending

A piggy bank sits on a table, surrounded by coins and bills. A chart shows savings goals and priorities. A child's allowance jar is nearby
The Maths of Saving: Coins along with a yellow piggy bank

When we begin our journey into financial literacy, it’s essential to understand the fundamentals of managing our finances. The two core elements we’ll be exploring are crafting a budget that works and differentiating what we need from what we simply want.

Creating a Simple Budget

Crafting a budget is akin to creating a map for our financial journey—it guides us in navigating our expenses and helps us stay on track. To start, let’s look at a basic budget structure:


  • Allowance
  • Other sources (e.g., gifts)


  • Needs (essential goods and services)
  • Wants (non-essential goods and services)

Savings should also be a key category, no matter how small. It’s good practice to save a portion of our income, such as from an allowance, before allocating the rest to our expenses. This ensures that we prioritise saving money, perhaps in a piggy bank, and understand the impact of compound interest over time.

Differentiating Between Needs and Wants

To make the most of our budget, it is crucial to distinguish between what we absolutely require and what we desire. Needs are essentials, such as:

  • Food
  • Basic clothing
  • Transportation for school

Wants, on the other hand, include items like:

  • Latest gadgets
  • Fashionable accessories
  • Entertainment subscriptions

By prioritising our needs and scrutinising our wants, we can make informed decisions about our spending. This is not just about cutting back; it’s about making smart choices that align with our financial goals and responsibilities.

Remember, every penny spent on a want is a penny not saved for future needs or emergencies. Establishing strong money habits early on, like differentiating between wants and needs, not only aids in budgeting effectively but also lays the groundwork for a financially secure future.

Developing Healthy Saving Habits

A piggy bank sits on a shelf, filled with coins. A child's allowance is being added to the bank, while a chart shows the growth of savings over time
The Maths of Saving: Two piggy banks on table

Inculcating sound financial practices from a young age sets the foundation for future financial security. Our strategy involves two crucial steps: introducing children to saving early and reinforcing the significance of regular contributions.

Starting Early with Savings

Introducing the concept of savings to children can be a delightful experience when linked with their naturally curious nature. Milestones such as receiving their first piggy bank become significant, as they learn the value of money through habitual activities. We can make this process enjoyable by incorporating educational resources from platforms like LearningMole, which offers engaging and age-appropriate content to help explain financial basics. By starting early, we instil an understanding of the importance of setting aside funds for the future.

Encouraging Regular Deposits

Once children understand the concept of saving, the next step is to encourage them to make regular deposits into their piggy banks. This could be part of their weekly activities, such as contributing a portion of their allowance. Regular deposits help solidify saving as a habit, reinforcing the behaviour as they grow. Demonstrating the growth of their savings over time helps them recognise the benefits of consistency and patience.

Through these steps, we promote healthy financial habits that children can carry into adulthood.

The Benefits of Giving and Sharing

A piggy bank sits on a table, surrounded by coins and bills. A child's hand drops a coin into the slot, illustrating the concept of saving and sharing
The Maths of Saving: Coins along with a piggy bank

In this section, we’ll contemplate the invaluable aspects of instilling a culture of giving and sharing in children, focusing on how it fosters financial responsibility and strengthens community bonds.

The Concept of Charity

When we introduce charity to children, we talk about more than mere transactions; it is about kindling a sense of community and awareness. Through charity, children learn that their actions can positively impact others, which is empowering. An allowance, for example, can be a practical tool for teaching this concept. By encouraging children to set aside a portion for charitable purposes, we’re not only promoting generosity but also helping them to understand the joy of supporting those in need.

Teaching Financial Responsibility Through Sharing

Sharing is not just a social virtue; it’s also a key component of financial responsibility. By encouraging kids to share their resources, whether it’s pocket money or toys, we’re teaching them valuable lessons about managing finances. If we consider the simple act of sharing a piggy bank fund with a sibling to buy a joint toy, we can see a direct link to understanding budgeting, saving, and collaborative spending. Our collective experiences also show that sharing within a family or a community lays the groundwork for responsible financial habits in later life.

Incorporating Financial Literacy into Play

A colorful piggy bank sits on a table, surrounded by coins and bills. A child's allowance is being added as they learn about saving
The Maths of Saving: Money along with a piggy bank

We understand the importance of introducing financial concepts to children in a manner that’s both engaging and educational. By incorporating financial literacy into play, we can provide young minds with a practical and enjoyable approach to managing money through the familiarity of games and the interactive nature of apps.

Educational Games and Activities

Financial literacy can leap off the page and come alive for children through educational games and activities. For example, traditional board games like Monopoly not only entertain but also offer a platform to teach valuable lessons about spending and saving. Role-playing activities, such as setting up a ‘shop’ using play money and items, can make the learning experience tangible. In schools, teachers can create math challenges where students ‘earn’ play currency that they must manage, spend wisely, or ‘invest’ in classroom rewards.

Using Apps to Teach Finance

With technology becoming an integral part of our lives, using apps to teach finance is a natural step. Interactive apps designed to enhance kids’ financial knowledge provide a safe space for them to simulate savings and spending. Engaging video games that involve financial decision-making can also promote financial literacy. Moreover, many of these resources are free, making them easily accessible. For instance, there are apps that allow children to manage virtual portfolios or save ‘money’ to reach goals, thus translating abstract financial concepts into material experiences.

As we utilise these methods, we must remain conscious of selecting the right combination of toys, games, and digital applications that suit our educational goals. It is our responsibility to guide our young learners through playful yet meaningful activities that lay the groundwork for solid financial literacy.

Conversations about Money with Your Child

Children discussing saving money while looking at piggy banks and receiving allowances
The Maths of Saving: Children are counting money

Engaging in discussions about finances with your children is vital for nurturing a healthy understanding and respect for money, income, and saving. Through these dialogues, we prepare them for future financial independence and milestones.

Discussing Earnings and Saving

It’s important that we talk to our children about earning money, as it’s a fundamental concept that underpins financial literacy. We can start by explaining how people earn money by working, and how saving a portion of one’s income can contribute to a financially secure future. Using a piggy bank or a simple savings account can serve as a practical demonstration of saving money. For instance, when discussing allowances, we can encourage our kids to save a part of it regularly, highlighting the incremental growth of their savings over time.

Talking about Financial Milestones

As our children grow, our conversations should mature to include financial milestones relevant to their age. This can include setting short-term saving goals like purchasing a toy, or long-term objectives such as saving for university. By discussing these milestones, we not only teach them about the value of money but also about planning and working towards their goals. We help them understand that reaching these milestones is a step closer to securing their financial future.

When we approach these topics with a friendly tone, our children are more likely to engage in the conversation and take interest in their own financial well-being. Our role is to guide them through the landscape of personal finance with understanding and patience.

Interactive Tools for Learning about Money

A piggy bank sits on a table next to a stack of coins and bills. A child's allowance chart hangs on the wall, with spaces for saving and spending
The Maths of Saving: Coins and piggy bank on table

In this digital age, we have a plethora of interactive tools that make learning about money both enjoyable and educational for children and adults alike. Let’s explore some of the most effective online resources and physical tools that aid in financial education.

Websites and Online Resources offers a variety of tools and services to educate children about financial matters, including money management and saving. Their resources are designed to make the learning process intuitive, using engaging content to reinforce key concepts. Through their interactive tutorials and activity sheets, children can understand the size and value of different coins, learn about the functionality and purpose of saving money, and get to grips with basic economic principles.

Another excellent platform is the educational website with programmes specifically aimed at teaching economic and mathematical concepts. This website incorporates online games and simulations as standard for a medium that children find relatable. It uses keys, like progression through levels or earning virtual currency, to simulate financial lessons in a safe, controlled environment.

Physical Tools for Financial Education

For a tangible approach, physical tools such as the Money Savvy Piggy Bank are invaluable. This piggy bank is not your standard money box; it is divided into several sections, each intended for a different financial purpose – saving, spending, donating, or investing. It is an educational tool that helps children understand the different facets of money management in a concrete, hands-on way.

Furthermore, sets of play money that come in various sizes and denominations can be used effectively in role-play scenarios. These sets provide the tactile experience necessary for younger children to grasp the concepts of counting, exchange, and the value of money. Using these physical tools, children learn the practical aspects of handling money, which is a foundation for sound financial knowledge.

A piggy bank sits on a shelf, surrounded by stacks of coins and bills. A hand reaches out to drop a coin into the slot
The Maths of Saving: Lots of coins

In this section, we explore how borrowing influences our financial health and the significant role of credit in shaping our financial future.

The Basics of Borrowing and Loans

When we borrow money, it’s essential to understand that this money is not a gift; it’s a loan that we’re obligated to repay over time, usually with interest. Loans can take many forms, such as a mortgage for a house, a personal loan for unexpected expenses, or a student loan for education. To ensure a secure financial future, we need sound financial education to make informed decisions about when and how to borrow.

  • Term: The length of time over which the loan is to be repaid.
  • Interest Rate: The percentage of the loan charged for borrowing money.
  • Principal: The original sum borrowed before interest.
  • Repayment Schedule: A timetable for paying back the loan, including both principal and interest.

Understanding Credit and Its Impact

Credit is a powerful tool that can help us achieve our financial goals if managed wisely. Having good credit means lenders trust us to repay borrowed money based on our past behaviour. This trust can result in more favourable loan terms and interest rates. However, mismanaging credit can lead to debt accumulation and negatively affect our financial education and future.

  • Monthly Repayments: Bold for emphasis on commitment.
  • Credit Score: A numerical expression based on a level analysis of a person’s credit files.

The impact of credit on our lives extends to everyday decisions and long-term aspirations, from the ease of applying for a credit card to the prospects of owning a home. It’s critical to understand the responsibilities that come with credit to navigate borrowing and debt successfully.

Frequently Asked Questions

Saving money is a fundamental skill, and we often begin learning it as children. Piggy banks and allowances are traditional tools in teaching the value of money and the concept of saving.

What are the benefits of using a piggy bank for saving money?

A piggy bank serves as a visual motivator for saving. By dropping coins into a piggy bank, children and adults alike can physically see their savings grow, which reinforces the habit.

How can an allowance contribute to forming savings habits in children?

An allowance can act as a practical lesson in money management. It teaches children to budget, save for goals, and understand the difference between wants and needs.

Are there any drawbacks to relying solely on a piggy bank for savings?

Relying on just a piggy bank may limit understanding of modern banking systems. It also lacks the interest gains and security features that bank savings accounts provide.

Why is it important to develop a habit of saving money from an early age?

Developing a habit of saving from a young age embeds financial discipline. It prepares children for adult financial responsibilities and helps build a foundation for future financial planning.

Can you explain the ‘piggy bank saving method’ and how it helps in financial planning?

The ‘piggy bank saving method’ involves regularly putting aside a portion of money into a piggy bank. It’s a simple form of financial planning which encourages the setting aside of savings before spending.

What are some common beliefs associated with piggy banks and their role in savings?

Common beliefs include the idea that piggy banks are a first step in teaching children about saving and financial responsibility. They are often seen as a symbol of thriftiness and are associated with the joy of saving for something special.

Leave a Reply

Your email address will not be published. Required fields are marked *