Helping Children to Learn to Save Money

Children do not have an inherent understanding of the value of money. Time must be taken to help children to comprehend the value of saving money rather than spending it right away. The idea of saving will grow as a child matures. What are some practical steps to helping a child to understand how to save money?

The first challenge in assisting a child to understand the importance of saving money is to communicate as clearly as possible what money is. Even for adults, the concept of currency is a difficult one. Money is a means of transferring value. Currency is given by one person to another and in turn that person gives something of value back. If a child is unable to comprehend the value of money, then he or she will not see any reason to save it. The idea of saving requires that the person understands that the thing being acquired has value that sustains over time.

Children can begin to understand the value of money by being given an allowance in return for doing valuable work around the home. Such regular necessary activities as cleaning, mowing, and organizing properly should be given a reasonable value. To the degree that a child performs these activities on time and in a successful manner, the parent should reward the child with money to show this value. The connection between work and money can be emphasized if the parent takes the child to his or her place of employment. As the child sees the parent working and being rewarded with money, the child will be able to comprehend the importance of hard work and the connection it has with the value of money.

Once an understanding of money’s worth has been accomplished, the parent can begin to help the child put aside a portion of what he or she earn through chores around the house. The first goal should be very short-term so as to help the child to have a sense of accomplishment. The parent may even want to match to some degree what the child saves in order to help the child to reach a goal more quickly. The important thing is to allow the child to fairly quickly reach whatever goal he or she has in mind. In the early going it is important for the parent to allow the child to choose what he or she wants with minimal oversight and to allow the child to make errors along the way. As long as the choice is not dangerous to the child or others, the child needs to learn not only the importance of saving, but of making good choices with the money that is saved.

As a child matures and learns the joy of saving for and buying something desired, the parent can begin to show the child other opportunities to use the saved money. As children begin to interact with people of various economic situations, parents can begin to instill in their children compassion for the needy. Putting aside money should not be seen as an activity merely to fulfill the child’s own desires, but as a means of opening up the possibility of helping others who are less fortunate. Saving money can be seen as an activity that gives the child choices that allow him or her to be a blessing to others. Slowly, as the child develops, the concept of having long-term impact on the neighborhood and society in which a child lives can be cultivated. Immediate self-interest can be countered as the child sees the benefit of putting money aside to help those who are in real need.

Over time, children’s desires will grow and the cost of those things that they want will grow as well. Helping a child to see that money put aside in an account which draws interest will grow more and more over time will be a strong encouragement to avoid impulse spending. Sitting down with a child and showing him or her how the money that is being putting aside is itself being added to will help him or her to understand the value of putting aside short-term desires for long-term ones. A visual chart will help to show how the money being put aside is growing closer and closer to the intended goal. While some assistance from parents is warranted at times, the overall goal is to inculcate in the child an understanding that he or she is responsible for earning and managing money. As the child sees that good money management is rewarded and that wasteful money management results in loss or pain, then the child will have a positive outlook on saving money.

One of the great barriers to putting aside money is the desire to have what others have. Many people struggle to maintain a lifestyle that matches those around them. Helping children to be content with what they have, while at the same time putting aside money for those things they truly want helps to infuse the proper respect and approach to money. Parents can help by not frivolously buying whatever they or their children want, but by practicing sound money management techniques.

By living out a lifestyle of saving for what is desired and only buying what is reasonable, parents create a visual example that the child can follow into adulthood. Children are in development and will struggle with the idea of putting aside now for something later. Patience is needed to allow children to make mistakes as they grow in their understanding of what money is and why it is important. Children can be taught to save money in an appropriate manner, and the lessons that they learn will help them to be successful adults in the future.