How to Teach Your Kids to Save Money
It is never too early to teach children about saving money. Knowing where to begin can be tricky, but once you do it you will be so glad you did. Take a look below at some helpful tips on how to teach your kids to save money and live their best financial life.
1. Teach the value of money.
Begin by teaching children the literal value of money. Show them coins and bills and explain how much each one is worth. Helping them understand that the various coins and bills have value is a great way to introduce them to the world of cash.
Our son was obsessed with buying everything he saw in stores, once we taught him the value of money and he started earning his own money I could say that costs “$20” and he understood how much that was. To him it seemed like a lot because he knew how hard he would work for just $0.50 or $1. Because we live in a world where money is often virtual (in checking accounts, on credit, etc.) It’s so important that kids learn from an early age the value of money and how to use it wisely.
2. Introduce how to save.
Give them a money jar or piggy bank so they can begin saving their money. Explain why saving money is important and how it can help us reach our goals. Encourage them to use their jar or bank to save their own money towards a goal.
Check with your local bank to see if they offer a kids savings account program. Our local bank gives the kids prizes and treats when they bring in a deposit and it helps make saving money fun! The kids look forward to saving their money to take it to the bank, and we have enjoyed being a part of these programs.
3. Set goals.
Talk to your child about what goals they would like to achieve with their money. Do they want to save it for something special? How much do they need? How long will it take? Help them craft a plan to set financial goals.
I like to have a short term goal and a long term goal. We use 3 categories, Spending, Saving & Giving. Let the kids save their “Spend” Money for something they want now, and set a more long term goal like a Car or College for their Save Money so they learn the value of long term and short term savings.
4. Allow them to earn.
Give kids the chance to see that money needs to be earned. Allow them to do chores for money and earn a weekly allowance if possible. Praise them for their hard work and willingness to earn.
I actually prefer to pay my kids for different “Jobs” rather than just buying them things they want, I figure I’m going to spend that money anyway and I want to teach and train them with a good work ethic and spending habits so that they learn to have a more realistic approach to money vs. Mom just buying them the toys they want.
5. Teach positive spending habits.
Talk to kids about price matching, using coupons, shopping sales, and other positive spending habits. Explain to them how these habits can help them stretch a buck.
My son is 7 and he’s finally picking up on the concept that he can buy something or wait till it goes on sale and use a coupon and get twice as much with the same amount of money. He will now ask me if something has a coupon, or if I can tell him if I see a sale. I love seeing the light-bulb about saving money and not paying full price go off in his head and we have even made a special trip to the store in the past to grab something that was on sale that he had been saving and waiting for.
6. Model positive spending habits.
Let children see you using money in a way that is responsible. Let them watch you make transactions, pay bills, bargain shop, etc. When you model it they will be more likely to try it themselves.
We switched back to Cash & Envelopes about 2 years ago vs. using the Debit Card at stores for Groceries and Eating out. Not only does this help me be more responsible with my money, but it allows my kids to see the value of money. They can pull the cash out of an envelope, see how much is in there, count out change and other important skills that are often lost when we’re swipping a credit card. Often kids don’t understand how credit cards work but using real cash is an easy way to teach them valuable money skills and spending habits.
7. Have regular financial check ups.
Talk to kids monthly about how much they have saved and what goals they want to work towards. Open yourself up for any questions they might have.
We like to do this before we take our kids shopping, let them count their money, make a list and go shopping. It’s a great way to make learning about money fun and also instill in your kids some great life lessons that they will carry with them into the future.
Teaching children about money doesn’t have to be scary or difficult. Instead, give these tips a try and see what success you can find.