Teaching Your Kids to Save Money

Handling money wisely is one of the most important lessons that we can teach our children. Even very young kids can learn the basics of spending and saving. Kids who learn good money habits growing up become financially-responsible adults. But how can we help our children learn how to save money?

Show Kids Your Good Money Habits

Like any other habits, kids pick up cues from their parents on how to handle money. Let your children see you perform routine financial tasks, such as budgeting, bill-paying and saving. Explain to them how you make decisions between spending and saving money and talk to them about your savings goals, both long term and short term. For example, if you are tucking away $1,000 for Christmas between now and December, show your kids how you do that and where the savings are kept.

Make Saving Age-Appropriate

Kids can begin to save their own money at a very young age. They may have funds from chores or from birthday and holiday gifts. Young children often need visual cues for their savings and a piggy bank is a great way for them to see their money physically growing as they add to it. Older children can understand the concept of a bank account and can manage their own bank books and even debit cards.

Help Kids Set Savings Goals

Saving money has to have an end goal to make it realistic to kids. Help them set their first goals. Some savings goals may be long-term, such as saving for college or a car. Some will be shorter term, like saving for a bike or a computer game. Allow your kids to participate in setting their own goals and guide them in the practical steps to meet those goals.

Make Saving Fun

Saving money should be fun for kids and not just something their parents make them do. Once kids discover that a little fiscal discipline means that they can buy something really important to them, they are often more willing to put the effort in. Review your kids' progress with them occasionally and set up small rewards for meeting savings goals, such as a day at the beach or another fun activity. Eventually, the satisfaction of having money set aside will be reward enough, but encouraging kids in the beginning by making it fun helps get them started on the right financial path.