5 Tips for Teaching Kids About Saving Money

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Learning how to manage and save money is one of the most important skills I learned when I was a child and I’m thankful my parents were able to teach my sister and I such a valuable skill. Teaching my own kids about saving money is one of the more daunting undertakings of parenthood. It’s something I really want to get right! Because setting kids up with money skills from early in life puts them on the right path for debt free living when they become adults – which is so, so important in this day and age. I consider our money saving lessons works in process, and something I will not give up on. While I certainly don’t think I have all the answers, I am happy with some of the lessons my kids get on saving money. Here’s how we try to teach our kids about saving money.

5 Tips for Teaching Kids About Saving Money

 

1. Pay kids an allowance. Or give them some opportunity to earn money.

I know there’s a lot of controversy about kids and allowance. Should they get one? Should they have to work for it? How much should they get? We’ve gone back and forth on the allowance question and finally settled into a routine this year. Because honestly, how can kids learn about money if they don’t have to learn with? Our kids who are 11, 9, 7, and almost 5, get a weekly allowance of half their age. That means I pay out $5.50, $4.50, $3.50, and $2.00 every week. Every Friday is the goal, but I have to be honest, sometimes it doesn’t happen. Because not having the right change is often an excuse for me not to pay them, I started putting a lot of smaller bills into an allowance envelope every month so I always have the right change when allowance comes due.

My kids have chores and are expected to help out at home. They’re paid their allowance regardless, but I do remind them that they have an obligation to help out at home and that they do earn a bit of money for the effort. We’re a relatively big family and everybody needs to help out. The allowance does motivate them and that makes me happy.

2. Help them set up a bank account and take them to the bank often.

My two older kids have their own savings accounts and I encourage them to save a portion of their allowance. I have not opened formal savings accounts for the younger two yet, but it’s on my list to do one of these days. I don’t set an amount that my kids should save out of their weekly allowance, but do encourage them to put extra money in the bank. Our bank has what we call Free Cookie Friday – it’s just what it sounds like – free cookies on Fridays. It’s a big motivator for them to go to the bank on Fridays and they’re always disappointed when we go on a different day.

5 Tips for Teaching Kids About Saving Money - Ben #iamprotective #ad #collectivebias

3. Encourage them to set a savings goal.

One way saving is made easier is to encourage my kids to have a specific goal. My son wanted to save money for a big Lego set and daughter likes to have money for trips. We travel a lot and they have to have their own spending money. I’ve found it much easier to get them to put money in the bank if they know they’re saving it for something fun or big.

5 Tips for Teaching Kids About Saving Money - allow them to spend their money #iamprotective #ad #collectivebias

4. Allow them to spend their own money.

This is the hardest part for me – allowing them to spend their own money as they see fit. Now, we do have rules – I don’t allow them to buy candy or treats with their money, for instance. And sometimes they just buy things which pain me, like a lot of Pokemon cards. But I have to bite my tongue and let them make their own choices {and sometimes mistakes} after I council them on understanding their choices. Giving them control of their spending and money is key to learning money management. I’m all about natural consequences, and that means I have to sometimes just roll with their choices. When their money’s gone, it’s gone. I don’t give them loans or allow them to loan back and forth between each other. We’ve tried that – and it just ends in disaster. I do allow them to do extra chores to earn more money, though. And when they get desperate enough, they ask what they can do to earn more money.

5. Model responsible spending and engage in conversations about money and budgeting.

I’ve shared before about my mostly cash budget. My kids see me spending money and often ask for toys or lunches out. My normal response is, “That’s not in the budget.” or “I’m out of money this week.” Whenever I say things like that, my kids generally reply that I should just put it on the credit card, then. I like it when they say things like that because that leads into long conversations about the way credit cards work. I’ve known a lot of people get into big trouble because of credit cards and I hope that by sharing the reality of money and budgeting early and often, my children will never be worried about making minimum payments each month.

These are lessons I’ve learned about teaching my kids to save their money. Here’s another great resource for you to read as you consider how to best teach your children the same lessons: 3 Lessons on Saving Money All Parents Can Teach Their Children.

Now it’s your turn! I’d love to hear how you teach your kids about money! Please share what you do in the comments. I learn so much from my readers, and can’t wait to hear your thoughts.

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