How Do I Teach My Child to Save Money?

Howling for cookies at the grocery store. Begging for the newest toys. Kids don’t understand that things cost money. They also don’t understand that you can’t spend all your money — you have to save some of it, too.

Saving money isn’t something that comes naturally. It has to be taught. Luckily, with the right plan, teaching the concept of savings to kids isn’t that hard. These 10 tips can get your child on the road to becoming a lifelong saver.

• Explain how money works
  Saving makes more sense to kids if they understand what money is, how it’s used and why it’s important. Keep it simple. Explain to young children that money is something you earn by doing things. Once you receive it, you exchange it for things you need and save what’s left over.

• Make savings fun for kids
  Incorporating imaginary money during playtime is a great way to bring money to life, especially for preschoolers. Try playing store or restaurant, then explain to your child that they have to pay for things like groceries and restaurant meals. Once they’re older, they can start counting out dollars and cents to “pay” for things they want.

• Get hands on
  Saving for children starts with their hands. Spread some spare change out on a table. Trace the shape of each coin alongside younger children and explain how much each is worth. Discuss some of the things you could buy with different combinations of coins. Simply handling and talking about money is a great way to help kids understand saving.

• Teach them that money is earned
  Once your child understands what money is, it’s time to teach them that it’s earned. Give them opportunities to earn change around the house, then place it in a glass or clear plastic piggybank. As they complete tasks, they’ll watch their change pile up. Before you know it, they’re learning to save.

• Try the 3-piggybank saving method
  When your child is using a piggybank, add two more to the mix. Label one “give” for charitable causes, another one “spend” and the last one “save.” This gives kids the foundation for understanding the concept of budgeting and giving back as well.

• Create savings goals for your kids
  When kids begin to save, they may want to spend it all on candy and other small items. Give them a chance to spend as they’d like, but after some time, encourage them to identify larger items to save for. They’ll understand the satisfaction of saving when they finally make their purchases.

• Share your own savings goals
  If you’re currently saving for something, tell your child about it. It could be something large, like a vacation, or smaller, such as a pair of shoes. Explain why and how you’re saving. If possible, set a due date and let your child help you track it on a calendar to show your savings progress. By doing this, you’re modeling financially responsible behavior. And when they’re saving, they’ll feel grown up doing something you’re doing, too.

• Match your children’s savings
  Those of us lucky enough to have an employer match 401(k) contributions know how great it feels to be rewarded for saving. So good, in fact, that you’re more likely to do it. The same goes for kids. Reward them for saving by matching what they stash away and they’ll be more likely to save in the future.

• Give them an allowance
  Allowances are a great way to give kids a chance to experiment with spending and saving on a regular basis. While it’s tempting to wait until they’re older, experts warn not to wait too long to start giving an allowance. The ideal age is 5 years old or when they begin kindergarten.¹

• Start a savings account for your child
  Nothing says “grown up” to a kid like a bank account. Once they’re old enough, and have gotten the hang of saving, start a savings account for your child. Then, every so often, take their earnings to the bank and deposit them. You’ll both walk away feeling accomplished.

Start them off strong

Teaching your child how to save is about more than just saving. You’re providing them with the foundation for financial stability as an adult. Incorporate any of these tips into your child’s life and you’ll both be off to a great start.

1. Hill, Catey. “5 mistakes parents make when giving kids an allowance.” MarketWatch.com. https://www.marketwatch.com/story/5-mistakes-parents-make-when-giving-kids-an-allowance-2016-05-06 (accessed July 29, 2021).