Teaching Kids to Save Money the Easy Way

Teaching kids to save money is easier than you might first think. There are a lot of influences in a child’s life these days which teach them the opposite of what you might want – advertising tells us everyday that we can have whatever we want, right now, by putting it on credit and paying for it later. Of course, it’s not that simple – this is how people get into a burden of debt that can last a lifetime.

Children are particularly at risk of falling into this kind of thinking pattern. Bad habits formed in childhood can lead to financial disaster later in life. On the flipside, instilling good saving habits early on can help ensure you get your child off to a good start in life. But how do you do it?

Teaching Kids To Save Money by Example

The first rule of teaching anything to your children is to lead by example, and finances are no exception. One of the best ways to educate your kids on the idea of saving is to show them how it works in practice as you do the same for an item that will be useful to the whole family, such as a new car, TV, or camping trailer.

If you have a tendency to live too much on your credit cards, you might want to examine this habit before you start trying to teach your child to save. Children will pick up on the habits of their parents as actions speak louder than words. Of course, sometimes a credit card is useful and necessary – but if you regular buy non-essentials on credit as an “indulgence,” you’ll need to stop that if you want to set a good example for your kids. They learn by watching and mimicking you, so telling them one thing while doing another is bound to get you nowhere fast.

You will see the concept or setting an example repeated over and over again on this website. It's that important.

Give Them a Long-Term Plan

Children don’t have a natural tendency to think in the long term, which is why saving can be so difficult for them – it seems easier to spend five dollars on candy now, than to save fifty dollars for a new toy. This is why you may have to introduce a system to help them keep track of their dollars.

This is best done using a daily or weekly planner or print off and use this savings worksheet. This will help them see exactly how long it will take them to save for a given item. It lays out the path ahead of them, so they’ll be less tempted to spend their cash on impulsive items in the short term.

Teaching Kids To Save Money-The Dollar-for-Dollar Approach

Some parents create incentives for their children to save by offering to match every saved dollar with a dollar of their own. In other words, if your kid has a dollar and spends it, it’s only worth $1. If he or she saves it, it then becomes $2. This is a good way of introducing the concept of interest (or even return on investment, if your kids are a little older). Of course, you don’t have to go to the extreme of going dollar-for-dollar – a smaller incentive, like an extra 10 or 20 cents for every dollar saved, will often be enough motivation to teach kids to save money.



Another way to teach kids to save money is to open a savings account for them.



See details on our Teaching Kids about Money Ebook for more lessons on banking, checking accounts and credit cards as well as more money lesson plans designed to teach kids basic concepts and using cash in everyday life.