6 Tips For Teaching Your Kids to Save

Check out these ideas for helping children learn to set money aside

When it comes to teaching children about money—including the importance of saving for the future—it’s smart to start early. Here are some real-life examples of how parents, family members, and mentors can teach children good money habits. Taking these steps will help ensure your kids become financially literate teens and adults who understand the value of budgeting and saving.

Visualize Goals

Leanne Rahn, with Fiduciary Financial Advisors, says “I’m all for encouraging parents to use visuals with their kiddos as much as possible; especially, when we are encouraging kids to work toward goals.  Goals take time, patience, and determination.’’

For younger kids, visualizations could be coloring sheets.  Whereas, middle- and high-school-age teens could create a mood or vision board to keep them motivated.  Using something as a visual cue helps children (and adults) better focus on a goal and see the actual progress they are making.

Bring Back The Benjamins (and Jacksons)

Children born after the rise of smartphones in 2007 when so many parts of our life have become digital, may only see cash and coins on their birthdays.

“When we can simply press ‘buy now’ and swipe a card to purchase, it can be easy to miss the impact of spending hard-earned money,” says Rahn. “I encourage parents to make their kids pay with cash when possible to feel the power behind handing over what they have been adding to their savings jar/savings account over the past few months.”

Offer Spending Options

When they were tweens and teens, financial planner Tara Unverzagt gave her children options on how their birthday budget was spent. The idea here, she says, is that empowering your kids to make certain financial decisions allows them to learn through experience. “If the choice is a birthday party or no birthday party, who wouldn’t take the birthday party? But if the choice is a birthday party or saving for an iPhone or a gaming system,” she says “there’s some serious thinking to be done.”  Another smart parenting move is making kids pause at least for a week before plunking down money for any big-ticket items.

Explain How You Get Paid

With electronic direct deposits and online savings and checking accounts, many of our money transactions are nearly invisible.

“Talk with your kids about the money-related actions you are taking,” says Tim Melia, a certified financial planner who owns Embolden Financial Planning. “The kids do not see us putting cash in the bank. But perhaps at the dinner table, when we are talking about our day, incorporate your money moves.” You can also use time in the car or while waiting at a doctor’s appointment to sneak in financial lessons.

“You can say ‘Today was the first of the month, so my paycheck was deposited directly into our bank account,’” Melia suggests. If you have automatic deductions for monthly IRA contributions, explain those, too. “Kids may not know what an IRA is, so you can explain what it is and why you save for retirement. And they can ask questions,” he suggests.

Begin Budget Talks Early

George Kao, a certified financial planner in Arizona, says he began teaching his children about the importance of budgeting when they were as young as six.  It’s important to start them young so they understand the basic concepts of good stewardship.”

“We started with a basic concept of 10/10/80 (10% tithing, 10% savings, 80% spending). Over time,” he says, “as they got older, we began teaching them how to use budgeting software to control and monitor their spending.”

Make Giving a Priority

We can create a positive environment around money by teaching our kids the importance of giving.  “There is something powerful and rewarding about giving and seeing the impact it leaves behind,” Rahn says.

Encouraging kids to share what they have also assists in making the concept of money and what money can do more tangible, she says, adding “I can promise your children’s giving stories will be ones they never forget.”

Where to Save

Tools you can use to help children save are varied—from piggy banks, traditional savings, and certificate accounts to Custodial Roth IRAs, 529 Plans, plus custodial brokerage accounts and more. Your kids’ age and other savings goals are both factors in determining which option is best.  Contact a Trusted Financial Guide today to get started!

With reporting by Casandra Andrews