The Money Lessons Spend-To-Save Accounts Teach Children

Plus, Some of the Drawbacks

Mom holding a piggybank while her daughter puts coins in, representing teaching children about money.

Tang Ming Tung / Getty Images

As a parent, one of the most important life lessons you can teach your child is how to be financially responsible. It’s a lifelong skill that can not only help them reach major money milestones like paying for college or renting their first apartment, but it can also ensure a stable long-term future. And what parent doesn’t want that for their child?

There are many ways to help your child learn about how money works. You can let them sit in on your budget meetings with your spouse, allow them to use kid-friendly money-based apps, or even help them open their very first checking account.

Spend-to-save bank accounts are one way to help your child learn to spend and save responsibly. Below are the drawbacks and benefits of these programs.

How It Works

A spend-to-save bank account puts money in a linked savings account each time your child uses their debit card. For example, say they swipe their card at the movie theater. These programs will round up the total or add a few dollars to the charge, then automatically transfer this money into their savings account.

Many banks offer spend-to-save programs. Online bank Chime rounds up purchases made with a Chime debit card, then deposits this amount into their savings account. Bank of America’s aptly-named "Keep the Change" program also rounds up debit card purchases to the next dollar and tucks the “change” away in your child’s savings account.

Benefits of a Spend-to-Save Bank Account

These programs are a great way for your child to save money without really thinking about it. They’re also good options for children who have trouble sticking to a savings plan.

If your child uses a debit card regularly, this can help them save a few hundred dollars a year, which is big for a child.

Drawbacks of This Savings Method

One of the drawbacks of the spend-to-save model is that it encourages consumption and spending money, since the more you spend, the more you save.

With this model, your child isn’t actually learning to make saving a priority, since the saving is happening automatically.

This doesn’t help them build the discipline it takes to actually save money and not spend it just because it’s burning a hole in their piggy bank.

Another thing to consider is that many children don’t use a debit card that frequently, so the actual benefits may be slim.

Other Options to Teach Financial Responsibility

If a spend-to-save account doesn’t seem like the right tool for your child, consider other options to teach financial responsibility. 

For little ones, keep two jars somewhere prominent in your home, one for spending and one for saving. You may also add a third jar for gifting or giving. Then, encourage your child to split their allowance or any monetary gifts between the jars. That way, they can see a physical representation of where their money is going. Once the jars reach a certain dollar amount, take them to the bank to deposit their savings, allow them to spend the savings portion however they like, and if applicable, help them choose a charity to gift their giving money.

For older children, giving them an allowance and allowing them to earn extra cash by doing chores and odd jobs around the house is a good place to start. Help them open a custodial account. That way, they’ll have their own money and be tasked with spending—and saving—responsibly, but you can also keep a close eye on things.

Teens may also benefit from working a part-time job. Earning their own money and calculating how many hours they’ll need to work to buy that new pair of sneakers can work wonders for teaching financial responsibility. You could also encourage the use of finance-based apps for teens, such as SmartyPig or iAllowance.

At this age, it’s also appropriate to start talking about the cost of college. Don’t forget to discuss how much that four-year degree will actually cost. Explaining the long-term costs of student loans plus interest is a great way to teach your child about money and how to make wise, long-term financial decisions.