We all know that saving money is essential. You never know when an unexpected expense might come up or a financial challenge (like job loss) can be thrown your way. But it can be hard to get in the habit of saving as an adult when so many other things are demanding your time, attention, and dollars.
It’s best to get into the habit early, so one good idea to set kids up for success down the road is to teach them about the importance of saving and give them some tricks for how to do it. Getting kids to focus on something like personal finance isn’t easy, but you can set your child up for success down the road with a few helpful hints.
Start with the Value of Money
First, you need to help your kids understand the value of money to communicate why saving is essential. Begin by expanding on math basics, using counting or games to help them understand the relative concepts of having money and how it’s used. Board games can be helpful tools—even the simpler ones for younger kids. By exchanging tokens for things in the game, they begin to understand the idea of money.
Decide How to Handle Allowances
Many of us had allowances growing up, and they remain a popular way to teach kids about money. Some parents simply give their child a weekly or monthly allowance, while others prefer to tie the allowance to completing chores to demonstrate how jobs work. Others use allowances as an incentive for things like good grades or saving a certain amount. Decide how you want to structure allowances and how much you’ll give. Make the terms clear to your child—and honor them.
Begin with a time-honored savings method for kids: the piggy bank. Of course, the stereotypical pigs are not the only choice these days. They come in all kinds of shapes and characters. Let your child pick one they like best and show them how to put coins or bills inside. Explain that the money that goes into the bank should be left there. You can even talk with your child to find out if there’s a toy or other purchase they have in mind and set a savings goal based on that.