Children’s use of saving strategies: An experimental approach

The purpose of the present research was to investigate age differences in children’s ability to apply saving strategies and adopt a precautionary saving motive when confronted with income uncertainty. The economic problems children face in real life were used as the basis to design a game. Children played this game in two studies: The first study investigated the saving strategies used by 42 children (14 each at 6, 9, and 12 years of age) when saving up tokens for a chosen target toy. In this study, the length of the game, and therefore the future, was unknown to the players. Results suggest that between the ages nine and twelve children acquire the ability to manage their money on a formal level; e.g. they learn to deal with bank accounts and banking facilities in a useful, functional way. Twelve-year-olds frequently made use of the deposit facility of the bank in order to avoid temptation. For the second study, the game was altered so that children’s ability to adopt a precautionary saving motive could be examined. In this study, players were told about the length of the game. Thirty-six children (nineteen 6–8 year olds and sixteen 10–11 year olds) took part, with both age groups being equally successful but using different strategies to cope with high or low fluctuations in income during the game.