How to Teach Children to Save their Money

Teaching children to save their money is a gift that can produce benefits for their entire lives. While it may seem daunting to impose willpower and discipline over the impulsive nature of youth, the value of saving can be taught through tangible results, both positive and negative. The skill of saving money, once acquired, can squash the wanton spending sprees of childhood and yield adults who are both secure and satisfied financially.

Your most powerful tool as a parent is to teach by example. This can certainly be applied to saving money. Let your child see how you navigate the process. Start by announcing a goal, perhaps needing to save for a new set of patio furniture for the summer. This would need to begin in the preceding fall or winter, and would show children that it takes time to save up. As the weeks roll on, tell them what you are passing on buying as you stroll down the department store aisles.

Teaching children the discipline of not engaging in impulse buying, and how an unintended luxury purchase would crimp your savings plan, will illustrate that it takes effort and willpower to stick to your goal. An old-fashioned trip to the bank to deposit your paycheck, or switch funds from checking to savings, will visualize for them where money should be going if you’re going to save it. Finally, take them with you when it’s time to make your desired purchase. Letting them see the satisfaction you exude when you’ve achieved your goal shows them the tangible reward at the end of the journey.

Once a child sees how a savings plan can work, let them put their own into action. Have them start with a small, short term goal in order to boost their spirits with an early success. Saving for a date at the movies or a new makeup kit can be done in a few weeks of allowance or part-time income. You can even entice them further by matching out of your pocket what they save in their desktop bank. This helps reinforce savings behavior and awareness of compounding. If they are old enough to understand it, you can even take them to the bank and co-sign a savings account so they can see interest at work through their bank statements. When they realize their financial goal and use their own funds for their intended desire, their initial success should lead to many more in the future.

While success is the goal, financial failure is always lurking. It’s better to learn this hard lesson as a child, when the stakes are not so critical. Letting your child miss their goal can be just as valuable a teaching tool as guiding them to achieve it. If that longer-term plan to save a couple hundred dollars for a product is not met on time, their world will not end. Simply explain to them that the frequent fast food meals, needless new ring-tone, or impulsive shoe purchase may have quenched an immediate urge, but delayed the purchase of something they said they truly wanted.

If children miss their purchase opportunity all together, as the sale price on the product may have expired or the ballgame they wanted to attend has passed. Help them understand that their dejection over missing their goal could have been prevented with financial discipline, and to evaluate whether those minor pleasures were worth missing out on their desired prize. There will always be another jewelry sale or home game to go to, but it sets the stage to not miss out on the new cars or family vacations of adulthood.

Money in your children’s pockets can be like water in a sieve. Without proper discipline and examples to follow, much like the sieve, those pockets will be empty pretty quick. Parents can teach their children to save their money and enjoy the rewards just as they themselves do. Teaching children that money grows in a bank and not on trees can give them a big boost towards a happy adulthood.