10 Tips for Helping to Teach Your Children to Save

Saving money is a habit that can take time to build, and even some adults have yet to master it. Consider this: Just 41% of Americans have savings set aside to cover emergency expenses. With that in mind here are some things you can do to get your kids – and perhaps yourself – on the saving bandwagon.

  1. Discuss Wants vs. Needs

The first step in teaching kids the value of saving is helping them to distinguish between wants and needs. Explain that needs include the basics, such as food, shelter and clothing, and that wants are all the extras. You can use your own budget as an example to illustrate how wants should take a back seat to needs in terms of spending.

  1. Allow Your Kids Some Money of Their Own

Sixty-eight percent of parents said they paid their children an allowance in 2016, with kids earning $26.58 per week on average, based on six hours of chores. If you want your children to become savers, giving them their own money provides them with the opportunity to learn how to use it. When you offer allowances in exchange for chores, they’re also learning the value of their hard work.

  1. Help Them to Set Savings Goals

To a kid, being told to save without explaining why may seem pointless. Helping children to define a savings goal can be a better way to get them motivated. If they know what it is they want to save for, help them break down their goals into manageable bites. For example, if they want to buy a $50 video game and get a $10 allowance each week, help them figure out how long it will take to reach that goal, based on their savings rate.

  1. Give Them a Dedicated Place to Save

Once your children have a savings goal in mind, they’ll need a place to stash their cash. For younger kids this may be a piggy bank, but if they’re a little older, you may want to set them up with their own savings account at a bank. That way they can see how their savings are adding up and how much progress they’re making toward their goal.

  1. Encourage Them to Track Their Spending

Part of being a better saver means knowing where your money is going. If your children get an allowance, having them write down their purchases each day and add them up at the end of the week can be an eye-opening experience. Encourage them to think about how they’re spending and how much faster they could reach their savings goal if they were to change their spending patterns.


  1. Offer Savings Incentives

One of the reasons people save in their employer’s retirement plan is the company matching contribution. After all, who doesn’t like free money? If you’re having trouble motivating your kids to save, you can use that same principle to ramp up their efforts. For example, if your child has set a big savings goal, say a $400 tablet, you could offer to match a percentage of what he or she saves dollar for dollar. Alternately, you could offer a reward anytime your kid reaches a savings milestone, such as a $50 bonus for hitting the halfway mark.

  1. Leave Room for Mistakes

Part of putting kids in control of their own money is letting them learn from their errors. It’s tempting to step in and steer kids away from a potentially costly mistake, but it may be better to use that mistake as a teachable moment. That way they’ll know in the future what not to do with their cash.

  1. Act as Their Creditor

One of the basic tenets of saving is to not live beyond your means. If your child has something he or she wants to buy but is being impatient about saving for it, becoming your kid’s creditor can help to teach the value of saving. For instance, if your child wants to purchase something that costs $100, you could “lend” the money and require payment from the allowance you provide, with interest. The lesson you want to teach is that saving may mean delaying gratification longer, but the thing you want to buy won’t end up costing you more just because you had to wait to get it.

  1. Keep the Lines of Communication Open

It’s important to talk to your children about the value of long-term investing, market volatility and even show them financial statements. If you want kids to learn about saving, it must be an ongoing discussion. Whether you schedule a regular weekly check-in to talk about money or make money chats part of your daily round, the key is to keep the conversation going.

  1. Set a Savings Example

Many Americans have zero savings for retirement, emergencies, college or other financial goals. If you want your children to become savers, being one yourself can help the process along. Getting your emergency fund in shape, opening a  savings account or simply increasing your 401(k) plan contributions are all steps you can take to encourage saving as a family activity. You could also decide to save for something together, such as a family vacation or a pool.

The Bottom Line

If you’re a parent, making saving a regular part of your child’s routine can lay the foundation for a bright financial future. The tips outlined here can be a good place to start.
— Nikki Earley