What is the Right Age to Start Saving Money?

Introduction

As a college fresher, I was excited to receive a monthly allowance. Like most students, I enjoyed hanging out with friends, shopping, and dining out. Saving money and financial security never crossed my mind—until it was too late. I always believed that managing finances was something to worry about only after I started earning.

Unfortunately, an unexpected emergency arose, and I had no savings to fall back on. I had to turn to my parents for a large sum of money, which made me hesitant, as I didn’t want to add to their financial burden. That was when I realized—what if I had some savings?

Sadly, financial literacy was never a part of my school education. My parents, like many others, likely assumed there was plenty of time to learn about money management and often delayed discussions about finances.

But is there a right age to start saving money? Should early financial education be encouraged or are they only relevant in adulthood? The answer might surprise you—as saving isn’t just for adults; it’s an essential skill for high schoolers too. So, when is the right age to save money and why does it matter?

Why Early Financial Education Matters

According to behavioural experts David Whitebread and Sue Bingham from the University of Cambridge, children begin forming money habits as early as seven years old. However, even if you’re already in college, it’s important to understand that financial success starts with small steps. Early financial education helps you develop some basic financial habits and money management skills. As an adult, a strong financial foundation gives you the confidence to manage money, save, and plan for the future.

Also Read: Could Financial Literacy Programs Be a Game Changer in College?

Money Management and Early Financial Education in College

A 2023 OECD study found that only 34% of adults are financially literate, highlighting the need for early financial education in late high school or college. Learning financial habits early can lead to long-term benefits, such as lower debt levels, higher savings, and better credit scores.

Financial habits for students mean instilling the values, practices, and rules for managing money and making financial decisions. When your parents give you pocket money every week and encourage you to spend it wisely, a financial habit is introduced. This helps you learn how to budget for the things that you want and the things that you need.

Importance of Financial Literacy

Source: Single Debt

Saving Money as Adults and Setting the Foundation

Early financial education can set the foundation of financial responsibility and independence in students.

• Simple techniques:
  • Piggy Bank or Jar – Encourage yourself to add small amounts of coins and notes in a container as savings.
  • Pocket Money – Keep some amount of pocket money as savings instead of spending it all.
  • Savings Goals – Set goals to decide how you will use your savings like buying a book or eating out, etc.
  • 50/30/20 Rule – Guide yourself on how to manage your allowances as 50% for needs, 30% for wants, and 20% for savings.
  • Reward Savings Efforts – Motivate yourself to develop financial habits when rewarded for reaching your savings goals.
  • Savings Account – This is suitable for all age groups.

How early habits shape financial responsibility

Adopting financial habits from early college days helps you become a financially responsible adult. Here’s how early financial habits shape financial responsibility:

• Saving from a young age helps develop financial discipline
• Understanding needs vs. wants supports your spending wisely
• Planning and budgeting skills help promote financial awareness
• Adopting an earning mindset encourages the value of hard work and earning
• Smart spending skills guides you for better financial decisions
• Financial awareness about risks helps you prevent financial problems later

Also read: How Financial Literacy in College Prepares Graduates for Retirement?

The Right Age to Save Money

While early childhood is for understanding money and its purpose, the right age to save money starts in your teenage years. The key stages with specific money lessons and habits to develop are explained below:

Teenage Years (13–18 years)

1. Open a savings account and learn budgeting basics:

This is the ideal age to learn about banking and budgeting. Open a savings account in your name and learn the basics of deposits, withdrawals, and tracking your balance. Review your bank statements regularly and seek help from a trusted adult. Building these habits in late high school helps you become financially responsible before adulthood.

2. Save for small goals (gadgets, outings):

If you learned goal-setting for necessities in childhood, now is the time to apply it to short-term savings. Plan and save for things like a mobile phone, laptop, or a trip. Developing budgeting skills at this stage helps prevent impulsive spending.

3. Understand terms like credit and student loans:

If you’re considering a student loan for higher education, this is the right time to learn about loans and interest rates. Visit a bank with a relative to understand the process. Get yourself used to concepts like credit cards and credit scores. Early awareness of responsible borrowing helps you manage financial commitments wisely.

College & Early Adulthood (19–25 years)

This stage marks the transition to financial independence. Developing smart money habits early in college can set the foundation for long-term financial security for you.

1. Start long-term savings

Long-term savings help build financial stability and wealth over time. Two key options to consider:

• Fixed Deposits (FDs): This is a secure investment option where your money is locked for a fixed period and earns interest. Ideal for those looking for stable returns with minimal risk.
• Mutual Funds: This is a slightly risky yet rewarding option where your money is invested in stocks, bonds, or other assets. Great for wealth creation in the long run.

Once you start these investments early in college, you learn more about the benefit from compound interest, making your savings grow significantly over time.

2. Build an emergency fund

Unexpected expenses—medical emergencies, job loss, or urgent travel—can arise anytime. Having a dedicated emergency fund helps you stay financially secure without relying on loans or family support.

• Save a small amount regularly. Set aside a small portion of your stipend, salary, or allowance every month.
• Keep it separate. Use a savings account only for emergencies.
• Aim for 3–6 months of expenses. This ensures stability during tough times.

3. Aim for financial independence

Beyond savings, this phase is about becoming self-reliant in money management. Learn to:

• Track your income and expenses.
• Avoid unnecessary debt and manage credit wisely.
• Plan for future goals like higher studies, travel, or purchasing assets.

Starting these habits early will make managing money easier and stress-free in the long run.

Also read: A Guide to Smart Money Management for College Students

Early Financial Education in College: How Parents Can Lead by Example

Parents can have a great influence on our financial habits. Their guidance can help college students develop responsible money management skills in the following ways:

• Influencing financial behaviour: As young students, we often learn money habits by observing our parents. Responsible spending, budgeting, and saving shape our mindset, while impulsive habits can lead to poor financial decisions.
• Setting a positive family financial culture: Open discussions about budgeting, savings, and challenges help us develop a healthy financial outlook. Transparency fosters confidence in managing money.
• Encouraging financial independence: Receiving small allowances, guidance on budgeting, and getting to manage personal savings teach us responsibility and instill decision-making skills.
• Educating through experience: Involving in real financial activities, such as grocery budgeting or planning a family savings goal, provides hands-on learning.
• Setting financial goals: Setting and achieving financial targets, like saving for a trip or planning for higher education, teaches long-term planning and delayed gratification.
• Handling financial challenges: Learning to navigate financial setbacks from parents teaches us resilience. Demonstrating smart financial adjustments fosters adaptability.

Learning Money from Parents

Dos:

• Talk openly about money and financial decisions.
• Ask tough questions on budgeting and financial security.
• Learn the importance of saving and mindful spending.
• Explore financial tools like savings accounts and budgeting apps.
• Understand the value of money through work and investment concepts.

Don’ts:

• Avoid financial secrecy; engage in discussions to stay informed.
• Don’t overlook digital spending habits and unnecessary expenses.
• Don’t shy away from understanding credit, student loans, and financial responsibilities.
• Don’t be shielded from financial challenges—learning problem-solving is key.
• Avoid complete dependency—take steps toward financial independence.

Quick Money-Saving Tips for College Students and Young Adults

Some money-saving tips for students are as follows:

• Prepare a budget by tracking expenses and prioritising needs over wants.
• Use public or campus libraries, and buy books only if necessary. Otherwise, opt for second-hand bookstores or online discounts.
• Always carry your ID card so that student discounts can be used in stores and anywhere necessary.
• Opt for public transportation like buses, metro, or carpool to save fuel costs.
• Think twice before making a purchase, especially non-essential ones. Limit luxury and unplanned expenses. If a purchase requires borrowing money and is beyond your means, avoid it to prevent unnecessary debt.
• Cooking at home can help you save money. Why not share the cost with friends? This reduces extra expenses on ordering food or dining out.
• If the college or place you work provides subsidised services like a gym, canteen, etc, use them.
• Apply for scholarships, grants and financial aid based on your merit, eligibility or need.
• Along with studies, take up part-time jobs, internships or freelancing opportunities. This will help get an extra income.
• Open a savings account to save money regularly. This account can act as an emergency source at times of crisis.
• The 50/30/20 rule is a useful budgeting method. Allocating 50% of your income or pocket money for needs, 30% for wants, and 20% for savings can be beneficial, though it may seem tedious at times.

Conclusion

Financial literacy is not just a concern for adults – it is a lifelong skill that should be cultivated from early college days. Early money habits shape financial responsibility, helping individuals make informed decisions, avoid unnecessary debt, and build financial security. Learning about how to save, budget, and differentiate between needs and wants prepare you for a stable future. Whether through allowances, savings goals, or real-world money experiences, fostering financial awareness early ensures that young adults enter the real world equipped with essential money management skills.