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Financial Planning

Teaching Kids How to Save at Every Age

6/16/21 9:00 AM

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As a parent, teaching children all of life’s lessons can be challenging, especially when it comes to saving money. The good news is it doesn’t have to be.

When you start introducing responsible money habits at a young age, children will carry those skills with them into adulthood. By teaching the basics early on and modeling good behavior, you can play an important part in their financial well-being down the road. Here’s how.

How to Teach Toddlers About Money

Children start learning the moment they’re born, and as toddlers, they learn through imitation and repetition. You can begin by explaining what money is and where it comes from. YouTube videos, online games, and apps are excellent tools for a toddler because many use simple songs and cartoons to help them visualize the concept.

Some online games and apps that teach kids about money include:

You can also explain why we don’t buy everything we want at places like the grocery store or toy store. By repeating this exercise, you establish a solid framework for them to expand on as they grow.

For toddlers, visualization contributes to their learning, so ditch the old piggy bank and try a clear jar instead. The clear jar can hold coins and small amounts of cash so your toddler can see how much money they have. You can set fun goals along the way too, like getting ice cream when the jar is full.

How to Establish Positive Money Habits with School-Aged Children

When your child is older, you can introduce new methods of financial education. You may consider the idea of an allowance, where your child can earn money for doing household chores like laundry, mowing the lawn, washing dishes, etc. If you give your child an allowance, it will teach them the value of hard-earned money, and that to reach their goals, they will need to save, save, save.

One way to emphasize the habit of saving is to use the clear jar method they are already familiar with, only you will use three jars at this age instead of one. Each jar represents a different category, like saving, spending, and giving. For every amount earned, your child will split the funds between the three jars. When the jars are full, they can donate the funds from their giving jar and spend the money in their spending jar.

Another strategy is to use age-appropriate apps that help children track their earning, spending and savings in a fun, digital way.

Some apps include:

  • RoosterMoney - this app teaches kids how to set savings goals and track how much money they have earned. The app also has a virtual safe to teach kids about the difference between short-term and long-term savings. Available in Google Play, the App Store, and Amazon Apps.
  • PiggyBot - this allowance app teaches kids how to track spending and savings in a fun, easy way. Available in the App Store.

How to Teach Teens to Earn and Save Money

Whether your teen is going to the movies with friends, shopping, buying their first car, or making college plans, being a teen can be expensive.

This age is an excellent opportunity to teach your teen about the value of money by encouraging them to get their first job. Hopefully, your teen has been saving over the years, but if they haven’t, a job will teach them what it means to work hard for their money. They can use the same “save, spend, give” approach they did as a young child, or establish different savings goals, like buying a car, going to college, or taking a once-in-a-lifetime trip.

Helping your teen open a checking and savings account (complete with a debit card) will also help them learn about the entire financial process - from ATM withdrawals to writing checks. Having a debit card will also help them visualize their spending and teach them how to reconcile an account.

Once they have an account, download Intuit Mint. This app allows users to link checking and savings accounts, set savings goals, and determine monthly bills to pay. This financial snapshot provides teens with everything they need to understand their net worth, goals, and income. The app is available through Google Play and the App Store, or you can use the tool online.

As a parent, it’s important to make saving a regular part of your child’s routine. Having open conversations about money and providing them with resources to be successful will help build a solid financial foundation that will lead to a bright financial future. If you get lost along the way, check out the Slavic401k blog for additional tips and resources.

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