Teaching Kids to Save: A Comprehensive Guide for Parents

As with most life lessons, it’s easier to learn the value and importance of saving money when education starts at an early age.

Think about it: the younger you are, the easier it is to learn and retain a second language. So, it makes sense to teach healthy spending and saving habits to your kids when they’re still young.

1. Help young children understand money

Before kids can understand the value of saving money, they need to understand what it is and how it works.

Most children start to understand basic money concepts around the age of three. This is when you’ll want to let them start handling various coins and bills while introducing the idea that each one has a different value.

You can also help your child start their first piggy bank during this time. It's best to use a clear jar for the piggy bank so they can see money going in – as well as going out when they start spending.

2. Reinforce learning through play

I don't know about you, but I learned some of life's most valuable lessons as a kid by playing games. That's especially true when it comes to how to spend money, build up a savings account, and make wise financial decisions. While there are a number of games that teach these principles, Monopoly Junior and Life are two of the best.

Each of these games revolves around money management and will inevitably make your kids want to discuss money. Monopoly Junior is especially good at subconsciously teaching kids several money lessons, including why it's important to save.

3. Take a field trip

It's relatively easy to start taking your kids on money-based field trips from an early age. Many children’s museums have money-based exhibits that provide fun, hands-on learning experiences.

While a big trip to Fort Knox or a regional U.S. Mint location is ideal, these destinations aren’t always feasible. Instead, you can take them on a special trip to your local bank. Make it fun by helping them start a coin collection ahead of the trip. You can then demonstrate filling out a withdrawal slip and asking the teller for a roll of coins (or even silver dollars!) to add to their collection.

4. Enhance parental financial literacy

As with any subject, it's important to understand money management before you try to teach your kids about it. If you don't consider yourself a saving savant or you don't know the first thing about budgeting, you may need to brush up on your own money knowledge.

A good way to do this is by attending evening or weekend workshops to increase your financial education. You can also learn from the comfort of home by reading blogs and books about personal finance.

Remember, children look up to their parents, so the best way to teach kids to save is through your own actions and money-spending habits.

5. Foster a positive mindset about money

As an adult, it's easy to talk about money with a negative attitude. Maybe you're not getting paid enough at work – or the bills are due, and you don't have enough money in your bank account to pay them all. Whatever the reason, money troubles can get you down, and kids can pick up on that.

If you talk about money with a negative attitude, your kids may grow up thinking it's a bad thing – or that budgeting is too hard. That’s why it's important to keep a positive (or at least neutral) attitude about money.

Teach them that if they put in the effort and save enough, they can afford to buy items that are important to them. And if they haven’t saved enough yet? That’s okay. They can keep working at it.

6. Implement an allowance

Once you feel like your kids have a good grasp on money and how it works, start giving them an allowance. You can start with a standard weekly allowance or one that’s based on how many chores they finish.

Rather than giving your kids an all-cash allowance, consider using some of it to open their first savings account. Help them understand the value of savings goals and how to keep track of their finances so they always know how much they have in their account.

7. Emphasize the importance of savings

When your kids first get their first allowance, they will be tempted to spend it all right away. The same goes for birthday money and other financial gifts they receive.

While spending a little money on themselves is okay, it’s essential that they learn the importance of saving for the future or for large purchases down the road.

8. Instill the value of giving back

While you want your kids to learn how to save, you don't want those money management skills you’re trying to teach them to turn into greed.

This is a good opportunity to demonstrate the gift and value of giving back. In addition to verbally explaining the importance of generosity, you could get the whole family involved in age-appropriate fundraisers and charity events.

9. Practice patience and delayed gratification

When we’re young, everything feels an absolute necessity. Cue Veruca Salt and her “I want it now!” tirade.

We all had to learn the difference between a need and a want. And learning this concept early is so much easier than struggling with it as an adult.

Teach your kids that when they really want something, they should shop around, compare prices, and find the best deal. Or at least wait until they’ve seen what the rest of the store offers.

If they have their own money to spend, help them implement waiting periods before making a big purchase. They need to understand that delayed gratification can feel just as good, if not better, than instant gratification.

Final thoughts

If your child is old enough to count and understand numbers, they're old enough to learn about money and saving. Starting them at a young age is important to encourage and develop healthy financial skills.

Above all, remember to be proactive and keep an eye out for ways to have conversations about money, how it works, and why their future financial well-being is so important.

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