Teaching kids to save money

Children are eager to learn as they grow, so it’s important for parents to teach their children positive lessons about money from a young age. When saving money becomes part of a child’s normal development, saving for the future is likely to become a habit. Early financial education can be the first step on the road to financial freedom.

Start with the savings basics

Experts say you can begin teaching money-related lessons to kids as young as 2 to 3. Pre-schoolers may be too young to add or subtract, but these youngsters will understand value and the idea of trading items—the building blocks for understanding money. Later, as they acquire basic math skills, you can teach your children more complex financial concepts.

Helping your children avoid falling into the instant gratification pit is one great lesson to teach. An approach is to open a savings account for your child. When they receive birthday money or cash from chores, have them put some into the bank to save for bigger-ticket items.

If your kid is old enough for an allowance, encourage them to direct a percentage into savings. Check the balances often: Your children will enjoy watching their money grow as deposits build and accumulate interest.

Look for teaching opportunities

Learning about money shouldn’t feel like going to school, so turn it into fun by finding teachable moments in everyday life. When you go to the bank, explain that it’s like a garden that helps make money grow. You could buy a piggy bank, and encourage your child to fatten it up with spare change. When saving money becomes fun, kids look forward to repeating the behavior.

Technology can be a great assistant as well. If you’re looking for an app to teach kids to save money, there are dozens of options. You’ll want to consider your kids’ ages and what types of teaching methods will resonate best with them. Do they enjoy podcasts or videos? Would they like to learn in a competitive, gamified environment? Will they be self-directed, or are you looking for something to work on together? Do you want a free option, or are you willing to pay a monthly or one-time fee? Once you’ve outlined what will likely work best for your family, you can begin your research

Lead by example

Children are observant, so they often emulate their parents’ behavior. Be conscious of what you say and do around them because your money attitude will become theirs. Also, be vocal about when things cost money and when they don’t, including activities you do with them on the weekends or when vacationing.

The power of acknowledgement cannot be overstated. Children love to please, so praising them for positive behavior, like depositing money into a savings account or doing simple chores for pay, helps them feel good about themselves. Encouragement motivates them to repeat similar behavior, which ultimately becomes a habit.

Saving for the future

Try teaching your children money lessons that are fun as well as informative. By helping them develop better money and savings habits now, they’ll have the basic tools necessary for financial freedom as they grow.

Opening your child’s first savings account can be one of the first steps on their journey toward financial literacy.

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