Teach Your Child How and Why to Save Money

By Brad Harvey on April 28, 2024

Learning how to save money is a crucial skill for achieving financial success. It is best to instill this habit early, so parents should start teaching their children about saving money as early as possible. These lessons should be taught frequently and adjusted as the child grows and acquires more responsibilities. Although children may not be enthusiastic about learning these lessons, the instruction doesn’t have to be boring.

Here are five entertaining ways to teach children about the importance of money and how to save it.

1. Create ways for them to earn money.

Your child needs to have a source of income before they can start saving money. One of the best ways to help them generate income is by giving them an allowance. According to a 2022 study by T. Rowe Price, 79% of parents give their children an allowance, and 64% require their child to earn it. Children can earn their allowance by doing chores around the house, such as yard work, shoveling snow, or cleaning up in the kitchen.

By providing a financial incentive, your children may become more motivated to help around the house. This teaches them responsibility in the household and helps them understand that money is earned through hard work.

2. Use a piggy bank or open a savings account.

As children, we all were fascinated with dropping coins and dollars into our piggy bank and watching our money grow. Using a piggy bank is still practical for children to save money. It allows your child to easily store away their allowance, loose change, or money from their grandparents. You can also set rules for when your child can open the piggy bank to spend the saved money.

Another way to save money for your child is by opening a savings account. As the world has gradually become cashless, having your child’s earnings stored in a bank makes sense. By opening a savings account, you and your child can easily track their savings progress through the bank’s app or printed statements. If a checking account is also linked to the account, you can also monitor their spending.

3. Set up a shadow day.

Watching you in action is a great way for your child to understand money and saving. You can start by involving them in your grocery shopping routine. Make a list of the food and other items you need and set a budget for the trip. When you get to the store, you can explain to your child how you make decisions based on the prices, quality, and quantity of different brands while staying within the budget.

As you teach them your shopping habits, you can even let them pick out a small treat to buy with their own money. This way, your child will learn practical money-saving skills while also enjoying a fun and educational shopping trip with you.

4. Offer incentives.

If you want to encourage your children to save money, you can match their savings balances as a reward. You can do this by setting savings goals for your children, such as saving a certain amount of money. For instance, you may decide to match your child’s savings once they reach $50 by putting an additional $50 in their account.

You can also motivate your child to save money for a specific item or an event, like a school book fair or a family trip. This strategy will give your child something exciting to look forward to while they work hard to grow their savings.

5. Read children’s books and play money-related games.

Children can learn how to save money beyond what their parents teach them. You can take them to the local library to find age-appropriate books on money and saving. You can also encourage them to play games involving money, such as Life or Monopoly. These options provide an enjoyable way to teach your child the importance of budgeting and saving.

Summary

• Teaching children the importance of saving money can be challenging. However, certain interactive and enjoyable activities can impart money management skills and instill a positive attitude towards saving. These experiences set the groundwork for responsible financial habits and help children develop a sense of independence and empowerment as they navigate their financial journey into adulthood.

About Harvey Investment Management

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Brad Harvey, President and CEO