Fun Ways to Teach Your Kids About Saving Money: Our Top 10 Tips

Teaching your kids about saving money can be essential in starting them down the right path toward financial stability, but it’s not always the most fun subject to teach.  However, it doesn’t have to be such a daunting topic. Through fun tips and tricks, it’s easy for kids to learn about saving money.

 

10 Ways to help your kids save money

Helping teach your kids the importance of saving money allows them to learn the importance of living within their means and can help safeguard them against unnecessary spending and debt. 

1. Educate them about where money comes from

One of the most helpful financial lessons you can pass on to your kids is that money has to be earned. Having you swipe a credit card to buy them what they want isn’t doing them any favors. You’ve worked hard to provide for your family, and it’s beneficial for your kids to learn that for themselves. (It might even make them think twice before nagging you for more cash.)

2. Talk about the difference between wants and needs

The first step to teaching kids about money and the value of saving is by helping them learn and distinguish the difference between wants and needs. One way to explain it to them is that needs are things that are required and essential for survival. As children, their parents provide a lot of needs, such as food, water, clothing, and shelter. While wants are things that people would like to have, they are not necessary for survival. It’s easy for kids, or anyone for that matter, to want. The main difference you’ll want to emphasize to your kids is how urgent or essential the desired thing is when categorizing it as a want vs. a need.

3. Help them set SMART goals

Help your children set SMART goals when you’re teaching kids about money. SMART stands for Specific, Measurable, Achievable, Realistic, Time-bound, and is one of the most effective techniques for achieving goals as it provides a framework for structuring financial objectives and a path towards success.  A great example to show your children would be the goal of paying off debt, like a credit card.  For example, you’re going to work toward paying off your credit card by X date by making $X amount of payments per month. There is a specific goal in mind, a measurable amount, an achievable goal that is realistic and time-bound based on your income and only taxes and expenses. 

4. Pay for chores

While some parents may not want to pay their kids to handle chores around the house, such as cleaning their room and taking out the trash, you may be able to come up with some paid home projects. Depending on their age and ability, you may be able to hire them out as an assistant to paint the living room or help you with improving the curb appeal of your front yard. They not only see how work and money are involved, but they can also get some satisfaction from helping out the family on a big project. For younger kids, you can have them help you out with washing the dog or sorting laundry. Speaking of money, it can be incredibly helpful to pay your children in cash, even if you’re going to save some of it in the bank. Kids tend to pick up things quicker when they can hold it in their hands.

5. Encourage them to get a summer job

With school out, now is a great time to help your child earn some extra cash. Even if they are too young to work formally, you may be surprised at the money–making opportunities out there for your kid. One great place to start is by looking at what your neighbors need help with. Do you have older ones who could lend a strong pair of arms to help with some chores? Have anyone going out of town who would love someone to take care of their dogs while they are gone?  Are people looking for a babysitter? Even if you have to supervise, having your kid start a little business can teach them how to budget as well as save.

6. Open a bank account for them 

One of the best ways to save money for kids is by opening a bank account for your kids and helping introduce them to the concept of savings.  Credit unions and banks often offer special accounts geared towards children, and opening a savings account for youngsters is a good opportunity to teach kids that they can save for the things they want instead of impulsively spending their money. By depositing money from chores and allowances, money from birthdays and holidays, and eventually part-time jobs, your children can start to understand the concept of compound interest and the value of interest and money as they see their savings grow.

7. Pay interest on their savings to motivate them 

Let’s be honest: it’s hard to get kids excited to save money when banks are offering paltry interest rates. You can make saving a more enticing deal by offering to contribute based on what they put in. There are several ways you can do this: Have a fixed percentage: You can play it just like the bank and offer a specific interest rate for their contributions. To make it easy for your budget, you can schedule it for once a month. You can have your older kids chip in even further by having them run the numbers on how much interest they’ve earned from you. Do a match: Depending on how much your child saves, you may want to offer a simple match for every dollar they put in. (You can always set a maximum amount so you don’t go over budget.)

8. Provide visual aids

If your child is saving up for a new video game or toy, make a chart and mount it on their bedroom wall or the kitchen. Have a picture of what they are saving up for and track their progress. Every time they make a deposit, have them update the chart. You can make it as simple as adding stickers, or you can print out a fancy graph – whatever will keep your kid excited.

9. Give them a lesson in opportunity cost

Teach your kids about saving money and give them a lesson in opportunity cost. Opportunity cost refers to what you lose or give up in order to buy what you want for goods or services. For example, student savings and learning how to save for college may seem like a daunting, large sum of money to save when other opportunities arise, but the potential financial benefits of applying to jobs with a college degree may outweigh the initial cost of going to college.

10. Teach them how to track their spending

By employing your children or offering them an allowance for hard work and chores, you’re providing some autonomy and allowing them to make saving or spending choices. Kids saving money is an important life skill that can set them up for future success, but learning and understanding how to track their spending helps children develop a sense of responsibility for their financial choices and encourages good money habits. Managing money, sticking to a budget, and reviewing spending habits require discipline and help kids learn to make smart and informed financial decisions, prioritize needs, and understand the consequences of impulsive purchases.

5 Tips for helping your child save

The key is making savings fun and empowering. Want to start?  Here are a few things to keep in mind:

1. Base your approach on their age

Teaching your kids ways to save isn’t the most fun subject, but it’s essential to start talking to your kids early about the value of money.  However, base your approach on their age. Start younger kids off with a piggy bank to explain the basics of money and the importance of savings. For older kids, introduce them to bank accounts or debit cards, which can help prepare them for larger money-saving goals and saving for college. With the plethora of free tools and apps out there, you can easily help your child learn the basics of savings and introduce them to different types of taxes and how they affect their money.

2. Give kids a way to be in charge. 

Making your kid save isn’t going to help them enjoy the process. Give them some power so they can make choices on what they are saving for and how they are saving. Of course, you’re the parent, so you’ll present them with several options that you approve of, but let them pick.

3. Let them make mistakes.

It’s difficult as a parent to just watch your kid miss a goal, but it’s better for both of you if you do. Missing out on a game or a concert now while they are young is a smaller loss than having them struggle to save up for their first house or business.

4. Make games a part of the process.

Savings doesn’t have to be a lecture. Today there are free tools and apps that can help your child learn some of the basics of saving. If you prefer to keep your kids away from screens, you can keep it classic with games like the bean game, where you give them an allocation of beans and they have to utilize them like a budget. There are also board games like Monopoly that can help kids better understand how money works.

5. Celebrate the successes.

Just like you and me, your kids love to be praised for a job well done, especially if they’ve put a lot of effort into savings. Since savings is a habit, you can jump-start your kid by starting off with a game, gadget, or toy they’d like. Have your kid make a list of things that they’d like to have and narrow it down to one or two things. Once you and your kid have decided on what to save up for, you can come up with different ways to reach their goal.

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