6 Awesome Ways to Teach Kids About Saving Money

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I am a natural saver, but my husband is a natural spender. At first, it was a little hard for us to discuss spending. However, we had multiple mutual financial goals that we wanted to reach. So, we had to set multiple saving goals. This method helps us stay in agreement with each other about how we spend our money. It also helps motivate us so we can reach our financial goals faster.

Since we didn’t clearly understand the saving concepts (at least my husband didn’t 😊), we had a rough start at the beginning of our saving journey. Thus, I thought it would be a great idea to start teaching my kid, niece, and nephews about the concept of saving. This will give them a head start as they grow up.

Why saving money is important?

According to Investopedia, “the habit of saving money may be a crucial life skill.” However, it is not an easy concept to put into practice. With today’s economy, many American adults are living paycheck to paycheck, and most do not have a sufficient amount of savings set aside for emergencies.

Life is full of unexpected events. We do not know what is going to happen in the future. When you are in a bad situation, the last thing you want to think about is the debt that you are going to face afterward. Having a saving or an emergency fund will help minimize the damage.

Benefits of teaching kids about saving money early

• Kids learn quickly. Being kids, your children will have the ability to absorb everything happening around them. This makes transferring information and knowledge much easier and faster. You can start with a basic explanation of saving concepts, then build upon it.
• Helps build strong behavior foundation. When your kids understand the basic saving concepts, you can help them build a good money behavior foundation. This will transfer into good money habits and decisions as they grow.
• Knowledge is power. Having good financial knowledge is so powerful. It can inspire your kids to do the impossible. Saving knowledge will help them make good spending and investment decisions in the future. That means they will get a boost start going into adulthood.
• Shaping your own financial behavior. This one might seem a little odd, but you can also benefit from teaching your kids about saving concepts. Since you need to make a good example for your kids (we will discuss more in the section below), you will need to shape your financial behaviors. And that means better financial habits.

6 Awesome Ways to Teach Your Kids about Saving Money

Saving Conversation

You can start talking about saving money with your kids whenever you are both ready. However, it is important to start small and build in the values. You can start asking them about what they want in the near future. For example, “is there anything you plan to get next week?” Or next time you take them to the store, and they ask for a specific toy. You can tell them that they can save money for that toy.

Piggy Bank

Piggy bank is great way to teach kids about saving. Piggy banks have been around for a long time, and they are the symbol of saving. Piggy banks help kids understand the values delayed satisfaction and opportunity costs. They will also learn the meaning of saving and goal setting.

There are many different types of piggy banks available in the market nowadays. Below are a few suggestions:

Saving Jars

Saving jars are very similar to piggy banks. The purpose of these jars is to encourage kids to save and learn the value of delayed gratification. However, these jars are clear, and kids can see their saving progress. In addition, creating these jars is a fun activity to do with your kids. You and your kids can start by decorating the jars together. Then, labels can be added with their goals to keep them motivated.

Parent match incentive

Parent match incentive is a concept derived from employer match retirement savings. Companies usually offer to match their employees’ retirement investments up to a certain percentage. This is to encourage the employees to save for their retirement. The same concept can be applied to kids and their savings. You can start explaining that you will be adding additional money into their saving jars/piggy banks if they commit to saving for a longer time or with a greater amount of money. For example, you can offer to match $1 for each $5 they put into their savings if they are willing to save for six months instead of three months. This will also help to build a basic understanding of investment.

Lead by example

It is nothing worse than your kids looking at you as a hypocrite. They might not know the word “hypocrite,” but they do understand what it means. Therefore, you want to ensure that your words and actions are aligned. If you are teaching your kids about saving, you should not go on a shopping spree every other week. In addition, you can openly discuss your saving goals progress, so your kids can absorb the value of saving. This is one of the passive ways to teach about saving, yet it is a very powerful one.

Spending reminder system

This is one of the more complicated saving/spending concepts. It will be better applied when your kids are a little older. The goal is to help your kids be aware of their savings and spending. You can help them develop a warning system. For example, a green card = they are ok to spend with the amount of money they have; a yellow card = they need to be careful with their spending; a red card = they are about to use their last dollars. It is just an example. You can work with your kids to develop one that works better for them.

Conclusion

Life is full of uncertainties, and the best we can do is to be prepared for when bad things happen. Good money habits are very important since they will prepare you for rainy days. Saving money is one of these good habits. Therefore, teaching your kids about saving money at a young age helps them build a good financial foundation. With this knowledge, they will be able to make wise money decisions in adulthood.

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Check out more other money concepts you can start teaching your kids today.