Financial Resource Center

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Like any other habit, saving money takes time and repetition to really stick. If you want to give your kids a head-start on healthy money management skills, help them understand how and why saving is crucial. Afterall, it’s an important building block of a secure financial foundation.

You can implement age-appropriate rules and lessons to improve their savings smarts today. Start with these ten.

Wants vs. needs

Distinguishing between wants and needs is a life-long practice, which makes it the perfect place to start with kids. Explain that needs are things like as food, shelter, transportation, and clothing. Wants are everything else that can make life fun and enjoyable. When you’re at the store together, ask your child which items are wants and which are needs. You can also use examples from your own budget to show how needs take spending priority over wants.

Pick a place to save

For younger kids, having a physical piggy bank or other container they can easily empty to see and count their money is perfect. There are many options online and at local shops for “piggy banks” kids can design or decorate themselves! How about a dinosaur or unicorn bank? For older kids, you can set up youth saving and checking accounts together at your credit union. Most youth financial programs will also provide helpful, age-appropriate financial education.

Let them earn and handle their own money

Allowances for kids can be a hot topic—and there are many different ways to earn and pay out allowances—but it’s still true that allowing kiddos to earn and save their own money is the best way to let them learn. However you decide to structure chores and allowance, you’re teaching the value of work, the value of time spent working in exchange for money, and the value of responsibility in how they handle their hard-earned money.

Set saving goals

Saving without a purpose doesn’t offer much in the way of motivation. If you help them craft a personal saving goal, they will be more invested (pun intended) in the work and discipline required to reach that goal. Break a large goal down into more manageable actions and targets—how many dollars a week must they earn and save to reach their goal by a deadline?

If they want to save for multiple goals, here are some creative ideas to help them visualize their goals and stay on track:

  • Create saving containers for each goal. Have them label and decorate them.
  • Put a picture of the item they’re saving for next to the container or piggy bank.
  • Draw a thermometer or other visual indicator they can fill in to visualize how they’re getting closer to their goal.
    • For younger children, you could offer small rewards for reaching percentages saved, like 50%, 75%, etc.
  • Distribute allowances or pay for work in small denomination bills that can be easily split and encourages saving.

Track spending

Part of achieving saving goals, and eventually being able to pay bills on time, is knowing where your money is going. Have your child write down their purchases for a week or maybe a month. Encourage them to think about how they’re spending money and how much faster they could reach their saving goal if they changed their spending habits.

Saving incentives

To jump start your kid’s saving habits, you could offer a saving incentive that mimics an employer who makes a matching contribute to retirement savings. Or tell them you’ll contribute a certain amount of money toward their goal once they reach a certain benchmark, or if they decide to save all of their allowance for two weeks in a row. This can really help if your child has set an ambitious saving goal.

Let them learn from mistakes

Learning from mistakes as a kid, when the financial stakes are considerably lower, can teach impactful lessons without the risk of long-lasting financial damage. It may be difficult for you as a parent to watch your child make an unwise money move, but not letting them make those mistakes now could pave the way for bigger mistakes later in life when you’re not there to bail them out.

Be their creditor/lender

Not living beyond your means is an important rule to live by. However, loans and credit cards allow people to make large purchases they can’t afford at the moment. This isn’t always a terrible thing, but it can be a slippery slope into consumer debt. To teach kids how loans, credit, and interest work, you can offer to lend your child the money for a purchase they’re too impatient to save for. Lend the money, but explain you’ll require payment from the allowance you provide, with interest. The lesson you want to teach is that saving may mean delaying gratification, but it won’t end up costing more you if you wait.

Talk about money

You heard right. If you want your children to develop financial wisdom and a healthy relationship with money, you must allow and encourage an open and ongoing conversation about money. Answer their questions truthfully, even if that means admitting you don’t know the answer or admitting your own financial mistakes. Those will be teachable moments! Talking openly about money and spending decisions will allow you to emphasize values like hard work and responsible spending.

Set a good example

If you haven’t already begun your own family saving journey with an emergency fund, a college saving account, or your own retirement plans, start now and show your children how you’re budgeting and saving for these worthy goals. Show them how the family budget works. Tell them when you’re moving money to into a savings account instead of spending that money on a want.

You are the best teacher for your kids to learn from about saving and spending habits—especially because you’ve probably made mistakes and learned lessons you can pass down to them!