Teaching kids about saving shouldn’t be an afterthought — something you teach them about only when they want something. Parents should begin teaching kids about saving long before they realize they can collect change and earn dollar bills to get a video game they’ve been eyeing or to go on a spring break trip with friends. We should introduce kids to saving early so they will always have a mindset that they should set aside money regardless of their future wants or needs.
To begin instilling this mindset, parents need to be prepared. It’s hard to prepare for something we’ve barely been taught about ourselves, but let’s not make it harder than it needs to be. Teaching kids about saving should be fun and interactive. There are several approaches you can take and you can start as soon as your child begins showing comprehension of money-related topics.
Today I want to share with you a few fun ways to get started on teaching your kids about saving. I’m also going to provide an update on our household savings challenge. I also have a very special gift that I prepared for parents at the end of this article, so definitely stick around.
Teaching Kids About Saving
- Create a family savings challenge. Each person creates a goal for what they are saving for and work on ways to contribute to their savings pot. Give a short time frame for participation and measure your progress every month or so. The person who wins the challenge gets to be the first to purchase whatever is on their wish list. (This is the model we’re using for our challenge. I’ll provide an update below).
- Teach kids about saving for multiple goals using multiple savings buckets. Maybe you all have been talking about saving for a spring break trip to the beach. In addition to this goal, your young one wants a new bike. Teach your child how to save for multiple wants. Have them split their allowance among multiple savings goals. This will teach them to weigh their decisions carefully. They may eventually choose to focus on one goal over the other.
- Offer savings incentives. If your child saves a certain amount of money within a pre-designated timeframe, offer an incentive or agree to pay interest on the amount your child is saving. This will introduce them to the concept of interest being earned on their savings, lessons they will eventually put to use when they manage their own savings account.
- Speaking of savings account, you may want to take your child to the bank and open their own savings account. There are a variety of different savings accounts for kids on the market and there are even some companies who are making it easier for parents to distribute allowances and encourage savings. One of my favorites that I’ve heard of so far is FamZoo (and no, they are not paying me...I just like the concept of their product).
- My last piece of advice is to simply talk about money! How are your kids going to learn about money if they don’t hear you talk about it? We need to be good examples. Kids who see their parents manage the budget and save up for certain short-term or long-term goals already have an advantage over those who don’t grow up in the same environment!
Savings Challenge Update
A few months ago I shared with you in Teaching Kids to Spend, Save, and Give, that our family was participating in an impromptu challenge to assist in teaching our daughter about saving. Since the beginning of the school year, she has been receiving an allowance and she has opted to save all of her money towards purchasing an iPad.
Since the beginning of this little project, I’m proud to say our daughter has very carefully weighed all of her decisions with regards to spending her money. Out of eight months, she has only spent her allowance once and that was only on a piece of candy! She has happily put aside her money in her savings baggy with hopes of purchasing her iPad soon.
Unfortunately, her parents are losing! Both of us elected to set aside our monies towards something we really wanted. My husband wants a Steelers jersey and I wanted a new set of pots and pans.
My son decided to slobber up my very used Nokia Lumia phone, so I had to take all of my money (and I was winning – boo!) and contribute it towards a new phone. My husband hasn’t had to spend any of his money and is placing 2nd in our little savings challenge.
A few months ago during one of my candy binge phases, I chose to pay myself a fine every time I went to the grocery store for candy. Someone gently reminded me that I wasn’t helping myself by paying myself the fine so I started paying the fine to either my husband or daughter. Let’s say they made a pretty penny off of me.
Here is an update of our challenge results:
My daughter has currently saved $65.00.
My husband has currently saved $20.00.
And my savings are at a miserly $5.00.
So there’s the update. Regardless of my lack of progress in this challenge, I’m proud of my daughter’s efforts to carefully weigh her decisions when spending her money. Hopefully, with a little interest paid by mom and dad, she will have her iPad before the end of the year. (UPDATE 6/11/2018 – My daughter saved a little over $300 and purchased her own Google Chromebook in lieu of an iPad approximately six months after she started saving! Her Christmas and birthday money surely added to the total, but the point is that she could have easily spent that money on little things, but she didn’t!)
A Resource Guide For Teaching Kids About Money
Last year, I dedicated a great portion of time to curate a list of websites, articles, games, books, and apps that would be helpful for parents wanting to teach their kids about money. I’ve talked about kids and money a few times here at Life and a Budget, but I wanted to offer you something that you could download that will be helpful in preparing your child for financial success.
This thirteen-page guide has a little of everything to help you teach kids about savings. There are appropriate lessons for different ages and a list of resources including several websites that I’ve scoured the internet to find.
Believe me, I left no stone unturned when it comes to this guide. You don’t want to send your kids out into this world unprepared to handle their finances and this guide will provide you with everything you need to get started. Download your copy and be sure to share with other parents!
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