Teaching Your Child to Save Money

05
June

Most of us learned to save money only after we were in financial trouble. Mounting bills are expedient teachers, but they’re not the best way to learn. The best time to learn life skills is when you’re young. Start teaching your kids how to save money now. Otherwise you’ll have no one to blame but yourself for the grown-up children still living in your basement.

Start an Allowance
Sometimes you have to spend money than save money. A weekly allowance is a great tool to teach kids the value of money. The best time to start an allowance is when your child is old enough to start pestering you for stuff. Once you can’t pass a store or a Saturday morning cartoon without hearing hours of whining, it’s time that they had their own money.

But don’t just give the money away. Make them earn it. Assign a few age-appropriate chores for your child to complete weekly. If he completes those chores, give him a nominal monthly allowance. The simple chores will instill work ethic in your child and the idea that in order to get money you have to work for it.

Set Goals
Now that your child has a steady income, you’re ready to kill two birds with one stone. Now instead of listening to your child whine about what he wants, you can remind him that he now has his own money. You don’t have to listen to anymore whining and your child will learn that if there are things he wants he has to save his money to get it.

Start off with something small, like a new action figure or other moderately expensive toy that he’ll need at least two weeks of allowance saving’s to get. Once he sets his eyes on a prize, take a picture of the item and tape it to the refrigerator. Next to it, write the price of the item on a dry erase board. Next to it, write the amount of allowance that your child currently has.

Each time you give him his weekly allowance, ask him how much he intends to save and how much he wants to use for other things. Each time he spends or earns any allowance money, change the figure. He can watch his allowance grow right in front of his eyes.

When he finally gets what he wants, it will be the perfect reward for his savings. He’ll learn that if he buys less candy and Pokemon cards, he’ll have more money for the big stuff that he really wants.

Long Term Saving
The next time you complete the exercise, focus on larger items that he really wants — like a bike or a game system. While he’s saving, keep asking him to buy small things like candy and video games. As he works toward his goal, he’ll have to make important financial decisions: does he want the small thing now or the big thing later? When he hits college, he’ll already know that more money on eating out and movies now means less for the annual student ski trip.

Open a Bank Account
Piggy banks are great for little ones, but older kids feel more grown up when they have their own bank account. Most banks will allow parents to open up special accounts for their children that can only be accessed with parental supervision.

Once weekly when you give your child his allowance, drive him to the bank so that he can deposit it. Over the next few weeks, he’ll see his money grow in his account each time he gets his deposit slip. And when he gets older, his check card will seem more like a tool to help him manage his money and less like plastic access to a magical money tree and overdraft fees.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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