9 Tips to Teach Your Child to Save Money
/Saving money is a habit that can take time to build, and even some adults have yet to master it. With that in mind, here are some things you can do to get your kids—and perhaps yourself—on the saving bandwagon.
1. Discuss Wants vs. Needs
The first step in teaching kids the value of saving is to help them distinguish between wants and needs. Explain that needs include the basics, such as food, shelter, and clothing, and wants are all the extras. You can use your own budget as an example to illustrate how wants should take a back seat to needs in terms of spending.
2. Let Them Earn Their Own Money
If you want your children to become savers, allowing them to earn and save money provides them with the opportunity to learn how to use it. When you offer allowances in exchange for chores, they’re also learning the value of their hard work.
3. Set Savings Goals
To a kid, being told to save—without explaining why—may seem pointless. Helping children define a savings goal can be a better way to get them motivated.
4. Provide a Place to Save
Once your children have a savings goal in mind, they’ll need a place to stash their cash. For younger kids, this may be a piggy bank, but if they’re a little older, you may want to set them up with their own checking or savings account at a bank. That way, they can see how their savings are adding up and how much progress they’re making toward their goal.
5. Have Them Track Spending
Part of being a better saver means knowing where your money is going. If your children get an allowance, having them write down their purchases each day and add them up at the end of the week can be an eye-opening experience. Encourage them to think about how they’re spending and how much faster they could reach their savings goal if they were to change their spending patterns.
6. Leave Room for Mistakes
Part of putting kids in control of their own money is letting them learn from their errors. It’s tempting to step in and steer kids away from a potentially costly mistake, but it may be better to use that mistake as a teachable moment. In that way, they’ll know in the future what not to do with their cash.
7. Act as Their Creditor
One of the basic tenets of saving is to not live beyond your means. If your child has something he or she wants to buy and is being impatient about saving for it, becoming your kid’s creditor can help to teach the value of saving.
8. Talk About Money
If you want kids to learn about saving, it must be an ongoing discussion. Whether you schedule a regular weekly check-in to talk about money or make money chats part of your daily round, the key is to keep the conversation going.
9. Set a Good Example
If you want your children to become savers, being one yourself can help. You could decide to save for something together, such as a family vacation or a pool.
The Bottom Line
If you’re a parent, making saving a regular part of your child’s routine can lay the foundation for a bright financial future. The tips outlined here are a good place to start.