Helping Children to Save Money

learning to save moneyMost parents would like to see their children grow up to have good money habits, which include regularly saving money. But how can we teach them, when most of us, as parents, struggle with the same issue? Some children seem born with the desire to save, and some want to spend every cent as soon as they get it. It is this latter group who needs our guidance if they are to learn how to save money.

You can help your children to develop this skill, and if learned young and practiced during the formative years, it can become a good habit that will benefit them throughout their lives. It will also benefit you as a parent when your children save for the things they want,  rather than ask you for the money.

Parents can start by playing games that include earning and saving points or rewards, and then redeeming them. Board games such as Monopoly Junior and apps that teach about earning and spending are ways for children to learn that money is limited and wants are limitless. As soon as your children start getting money for gifts and/or allowances, real savings should be encouraged. When you think your children are ready, you can get them a piggy bank, or a bank account with a passbook to watch their savings grow.

At what age should you start encouraging your children to save money? An article from Forbes Personal Finance reports that children as young as three can grasp financial concepts like saving and spending, and that kids’ money habits are formed by age 7.

What will your children be saving for? If they have something specific in mind and know how much it will cost, you can make a chart together, showing what’s already saved and the amount still needed.

Will you let your children spend their savings on whatever they want, even if it is something you think they will regret buying? This could be a learning opportunity, and these early mistakes might save them from more costly mistakes later in life.

How long should it take to save for what they want? The time frame should be short to begin with, and then can be lengthened as the children get older and their ability to delay gratification increases.

Once your children have reached a few of their short-term goals, it might be time to introduce long-term savings for a bigger purchase. There is no reason they cannot save for both long- and short-term at the same time.

If your children are saving to help pay for a bigger purchase, such as a more expensive bicycle, you may choose to match their savings amount, or contribute a portion when the goal is reached.

How much should your children save? A rule of thumb for adults is to save at least 10%. We should encourage our children to save at least that amount and they can save more if they want to reach their goal faster.

Should the money ever be taken out before the savings goal is reached? Wants, needs, and goals can change; is it prudent to stick to a goal that may not be relevant any longer? Depending on their age, you might want to discuss this with your children and resolve it before the situation arises. However, to build good savings habits, the general feeling is that the money should be left alone until the goal has been reached.

Let your children see you saving so they learn that saving is something you do as well.  For example, talk about how much you need to save each month for a family vacation, and discuss deferring or forgoing a purchase because you are saving instead. Young children want to be like their parents, so they will be further inspired to save.

As often happens when helping their children learn, parents might find they improve their own saving skills as well!

Further information and ideas can be found in this article on