Teaching Children How to Save Money

My daughter is only two, but she has already mastered the concept of spending money. Any time she receives money for birthdays or holidays (or even just when she digs through my purse), her immediate reaction is to grab my hand and tell me she wants to go to the toy store.

I finally realized that even though she's only a toddler, it was time for me to sit down with her and teach her a little about saving money. After all, she already understood the concept of spending it. After doing a little research and talking to a few friends, I came across some strategies that are slowly helping my daughter understand what saving money means. Hopefully the tips below will help you educate your children about the art of saving and managing money.

1) Determine where you will save your money. Although my daughter does have a college savings account, I figured at this point a savings jar would be a better visual learning tool for her. Either way, have kids deposit any money that comes their way into their bank account or a savings jar. Be sure that you occasionally allow them to withdraw money when they want to make a purchase, otherwise they may be discouraged from saving at all.

2) Help your child set a goal. Whether they are saving for a new toy or a new bike, hang a picture of whatever they are saving for in their room. Next to the picture, draw some kind of chart that will help your children see how much they have saved and how much more money they need to save to get to their goal. If your kids love stickers, put together a sticker chart and let them put a sticker on the chart every time they get closer to their goal.

3) Give them an allowance in small denominations. The amount of allowance you give your children will largely depend on their age. Give your child their allowance in small denominations and encourage them to save a certain percentage each week. I recently started giving my daughter an allowance of $4 a week in quarters. Every week, we divide the quarters in half and she happily drops half into her savings jar. With the other half, she buys candy at the grocery store. Impressively, last week she decided to put all her coins into her jar so that she could put 4 stickers on her goal chart and be closer to reaching her goal!

4) Use grocery shopping trips as an opportunity to teach children the value of money. There are a ton of lessons you can teach your kids at the grocery store. Use the time you spend at the grocery store to teach your kids about coupons, sales, meal planning, buying in bulk and seasonal produce to name a few. My friend actually gives her kids a portion of the money she saves at the grocery store as a result of shopping sales and using coupons. As you can imagine, her kids love clipping coupons!

Learning about how to manage your personal finances is a life-long journey. By teaching your children how to save money and use coupons at an early age, you will help set them down the right financial track. Do you have any tips about teaching children how to save money? Please share with us!



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