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How to teach your kids about: Emergency Funds

To help teach your kids about saving for emergencies, I could just say: “Buy the book ‘Save Your Acorns’ by Robert Gardner and read this to your kids” and be done!

It’s such a good book to help kids understand the importance of saving for bad times. For

those that haven’t read the book, it is a story of a group of monkeys who have a lot of fun when there is plenty of food but need help from their friends, the bears, when their food runs out.

Rather than just saying buy that book, there are, however, a couple of extra points I feel are worth sharing on this topic. Especially as it’s such an important one.

So, here are a couple of extra things you can do to help your kids learn about emergency funds:

1. Talk to your kids about real-life events

Whilst many of you reading this blog will have managed to keep your jobs through the virus, many have been put on furlough and are seriously worried about their financial future once the Scheme ends.

Of those people who have been furloughed, I bet the ones that have got an emergency fund in place are glad they do. It will provide them with extra time to consider the changes they are going to have to make to overcome financial challenges over the longer-term. In contrast, those that don’t have an emergency fund could end up forced to take out debt and therefore get into further financial trouble.

I wanted to bring this topic up as I believe it is an opportunity to provide real-life stories to our kids about the importance of emergency funds. No one expected the virus to happen, but it did. We don’t know what in the future which will cause people financial stress but no doubt there will be another big life event which will have a significant impact on us all. We can’t predict what will happen and how bad it may be. All we know is that people who have an emergency fund will be glad they do.

I can totally understand that parents might not want to share these stories with their kids as it could cause worry and negative feeling towards money. I want to be clear that I’m not suggesting you scare your kids. I just believe that parents should find ways to be open with their kids that having an emergency fund can really help out in times of trouble. As kids will no doubt be aware of the Coronavirus already (after all, it kept them home from school), it is a good opportunity to explain that times of uncertainty like this are why adults put money away, i.e. have an emergency fund.

Without our kids seeing that ‘emergencies’ do actually happen they might not fully appreciate the ‘value’ of keeping some of their money in an emergency fund when they become adults.

So talking to them about real-life scenarios and reading ‘Save Your Acorns’ are my top two tips for helping your kids learn about emergency funds.

Next tip:

2. Get them to start building an emergency fund

The next tip is for them to actually start building an emergency fund. You don’t though need to call it an ‘emergency fund’. Whilst kids should know about the importance of an emergency fund, they probably won’t need an actual emergency fund for many years.

For our girls we get them to save at least 10% of all the money they receive for the long-term. This money is set aside primarily to help show them that if you save money then that money will grow. As it isn’t there to be spent on anything explicit, it also acts as the start of an emergency fund.

As they become adults I hope they don’t just spend all these savings as it’s not just their money that will be gone but it’s also their emergency fund gone. To help reduce this risk, I show them their savings as Blue Trees. By linking their savings to trees, they have a natural desire to protect them. I often ask them “What are you going to do with your Blue Tree forest when you grow up?” They say they will probably take some branches or seeds to buy some nice things. They do, however, get very defensive at the thought of cutting down a tree!

Essentially, their savings become the start of their emergency fund. As long as they have savings then they have the start of an emergency fund for when they become adults.

In addition, my hope is that as they become adults they will retain the habit of saving at least 10% of money received so their emergency fund grows over time. As their income increases, they will need to increase the amount they have in their emergency fund, so by forming a habit where they save more as they earn more, their emergency fund will build up too.


To teach your kids about emergency funds I’d firstly recommend you buy and read your kids the book, ‘Save Your Acorns’ by Robert Gardner (get your copy here).

I’d also recommend you:

  1. Talk to your kids about real-life events - this will help them see the importance of an emergency fund and how it can make a positive difference

  2. Get them to start building an emergency fund - The first step is to form the habit of saving at least 10% of the money they receive for the long-term which will act as an emergency fund as they get older.

Thanks for reading!



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