How to Teach Young Children How to Save Money

At some point, we realize (or we should) that our job as a parent isn’t just about providing food, clothing and shelter for our children, but it’s also about teaching them how to become responsible individuals so that they will be able to make smart and responsible decisions once they leave our homes as adults. One of the things we have to teach our children if we want them to become responsible adults is how to save money.

I’m not sure about your children, but my 4 ½ year old is beginning to understand the difference between a penny, nickel, dime and quarter. He doesn’t understand the value of each, but he is able to tell us the names for each respective coin. My husband and I have been thinking for a while now that we need to begin teaching him what it means to save money and the importance of it. After all, he needs to understand the value of money and how we have to work for it and save our money in order to afford the things he enjoys, right?

Most young children understand that before they can leave the store with a new toy, mommy or daddy (or whoever is with them) has to give the checker something first. They just don’t understand that it’s money or where it comes from or the value of it. This is what I want to begin teaching my son, because I know in a couple of years his “wants” are going to be more expensive and he’s not going to have an appreciation for them if he doesn’t learn how to save up for them and pay for them himself. Below are a few tips I found while researching how to help children start saving money.

• Use visual aids. Young children won’t get excited about saving money if they aren’t able to “see” that they’re making progress. Therefore, it’s a good idea to have a clear jar where they can drop their coins into as they receive them. They’ll like watching the money jar fill up with coins, which will get them excited to continue putting money into it.
• Create a goal chart. This is one idea I hadn’t thought about, but it makes sense. If your child wants a new special occasion dress, shirt, toy, or any other item then help your child find a picture of the item they want, as well as the price. Figure up how many weeks of saving it will take your child before he/she will have enough money to buy the item. Get a piece of paper or a small poster board and glue the picture to the top of it and make enough squares for every day/week to symbolize how long your child has to save to reach his/her goal. Let him/her put stickers on each day/week so he/she can see how close they’re getting to reaching the goal!
• Consider matching contributions. This is another idea I hadn’t thought about. If you give your child an allowance and require that he puts $1.00 in the “Save” jar, $1.00 in the “Church” jar and then the rest can go in the “Spend” jar, then consider rewarding him for putting extra in the “Save” jar by matching the amount of money he puts in the “Save” jar over the initial $1.00 you require. This will help him grasp the concept of earning interest and matching 401(k) programs, which will help in the future.

After all the research I did, the main thing I learned was that it’s important to make saving money fun for young children. When something is fun, they will want to continue to do it. This is why helping them find something to save for is beneficial – it gives them a goal to shoot for, which makes the whole process fun. In addition, I learned that it’s important for parents to lead by example, therefore, we should have a coin jar of our own where we put lose change, so our kids can see that saving is normal.