Teaching Your kid to Save Money: Useful Tips

Teaching Your kid to Save Money: Useful Tips

As parents, the list of lessons that we are responsible for teaching our children can seem dauntingly endless. From basic manners at the dinner table to tying a shoe, we straddle the line between caregiver and mentor on a daily basis.


One thing that often gets neglected is the value of managing their finances from an early age. Like so many other real-world lessons, this one often either gets overlooked or saved for much later in the child’s developmental period. With formal education often focusing on elaborate mathematical formulas and equations, the window to learn and cultivate the necessary skills needed in their adult lives can pass by all too fast.

The good news is that many parents have found a veritable cornucopia of tactics that can help any family work together to make mastering the skills of a successful budget not only effective, but even fun! It’s important to remember that just as children learn their school work through a variety of methods, so too will come their learning how to handle their cash. So whether your child is working from an allowance, odd job cash flow, or just the occasional gift-money, there’s no such thing as “too soon” to start.

Children see the world much differently than most adults. Impulses and the value of patience may still be developing, and so while you may be picturing a fat piggy bank to help soften the blow of college tuition, they may be more focused on the latest video game or newest shoes.

The goal should be one that reinforces the lesson(s) being taught while at the same time meets an end-state that keeps both parent and child mutually engaged in the lengthily process. You should expect their goals to change along the way, especially as the cash pile grows. Likewise, it’s ok to let them stumble along the way as long as you know how to not only anticipate the slip-up, but also have a plan on hand to help them get back on track.

9 Useful Tips

Prioritize Funds

One way to begin instilling the concept of prioritization with money and how to manage a budget is with the “envelope system”. The idea behind this system is different containers for money depending on the intended purpose of the cash. For example, one envelope is for a toy that they want, another is for spending cash at the family’s annual vacation trip, and another for their first car years down the road, pun intended. This way, when the child receives money from something, they can divide the money up based on their short and long term spending goals.


Feel free to play around with the system; it doesn’t need to just be boring envelopes. You can use different containers such as jars with labels or different themed piggy banks that will help the child remember just what exactly he or she is saving for. The purpose behind this is to show the child that we set both long-term and short-term goals based on the things that we want, as well as the things that we may need. It also allows for more rapid rewards as well as still saving for those long-term expenditures, that way your child will maintain their interest in savings.

Matching Your Child’s Contributions

Not only is this system encouraging for your child, it mimics a lot of what we see in the banking world around us today. Many investment plans, either through individual banks, places of employment, or credit companies offer some sort of matching system for your money. When it comes to children and savings, this is an excellent way to help them achieve their goals more quickly, which will also reinforce the lesson through a rewards-based system.

You don’t have to completely match their earnings to get the desired effect. You can, for instance, match 25 cents for every dollar they save, that way they reach their desired goals more quickly and you don’t necessarily break your own bank. As an added bonus, this system also helps to reinforce math lessons as they work to project exactly how much money they have accumulated.

Share Your Own Financial Planning With Your Kids

This tactic can be a little nerve-racking for some parents. The idea of sharing financial burdens with their kids may seem like a bad way to set the best example, but rest assured that there’s a right way and a wrong way to go about it.


Only share the aspects of the household’s finances that are most important to them, or the ones that you feel like sharing. Some children may not even realize that things such as cable television or trash service are commodities that are purchased in the free market with your hard-earned paycheck. When you get paid you can simply show your child how you allocate various amounts of your paycheck to the bills that are due.

This will show them that balancing finances is a life-long endeavor and serves as the cornerstone to enjoying certain things in life, not just the toys and games that we want. However much you plan to share with your kids, just ensure that they also understand that it’s ok to set aside money for the things that break the stress and monotony of modern life.

If you have a fun tradition of Friday night family pizza nights, show them that this is something that you set money aside for specifically and not just a random expenditure from some petty cash style fund. The goal with any finance training is to learn to strike the balance between the things that we need, and the things that we enjoy.

Teach Your Child To Look For Deals

In today’s day and age, paying full price for goods and services can be more of a choice than a necessity. From social media-driven discounts to old fashioned newspaper coupons, it seems that everywhere you look there is a way to save a little money on the things you buy. As your child sets spending goals, help them seek out and take advantage of savings on the things that they want to buy.

Sometimes this can be done by planning to buy something during a specific season and setting the goal accordingly, such as buying a new bike after Christmas when stores are starting to dump their holiday gift inventory. Sitting down and going through flyers with your child may seem a little outdated, but stores are still keen on offering huge savings in printed material.

Even price matching can help your child reach their goals faster than they planned, or by using less of their saved money than was originally projected. This system teaches your child to be an informed consumer, which will help them when it comes to making those big purchases later on in life.

Give Your Child An Allowance

Giving your child an allowance can not only help them reach their goals faster, it can also help to demonstrate one of the basic functions of adult life; the exchange of goods and services for compensation.

The idea is that a constant, think weekly, influx of money keeps their attention on their goals while at the same time learning that aside from birthday and holidays, money usually comes as a result of effort invested. Be sure to keep the chores at age appropriate levels though, asking a 5 year old to empty the dishwasher each night will probably only end in disaster for everyone involved.

Various tasks like cleaning their room daily, feeding the dog, or setting the dinner table are all great ways to not only earn their pay, but also learn to help out around the house. As they grow you can increase both the complexity of their chores as well as the amount of their allowance.

Give Your Child Financial Independence

As parents, we sometimes feel that we know best just what our children need to prioritize when it comes to spending. But overly restricting what they can and cannot spend their money on can sometimes lead to a lack of enthusiasm for the entire endeavor. Sure, they need new socks.

All of their current ones have holes and are permanently stained from running around outside without their shoes on. But convincing your child to set money aside for such a lackluster expenditure could cause them to lose interest in savings all together. Instead, let them purchase (within reason) what they are most passionate about saving for. If, in the end, they feel like the savings was worth more than what they spent it on, they will have learned a valuable lesson and in the future may be a tad more hesitant to part with their money.

My own son wanted to save his allowance for some computer gaming equipment. I explained that our internet is not ideal for intense computer gaming like he was picturing, but in the end I stepped aside and let him purchase what he set out to save for as a financial goal. The gaming equipment sits idly by, seldom used, and he learned to make sure that he completely thinks through the purchases that he has in mind.

Use Money-Themed Apps and Games

Most kids these days are probably equally if not more so proficient when it comes to smartphones, tablets, and computers. Using apps and games such as Savings Spree and Green$treets allow your child to learn about saving money even in the times when the cash flows slows up a bit.

For those children that are very visual learners, this is also a great way to demonstrate some of the lessons that you have been explaining to them. Odds are that your child will connect the financial lessons you’ve imparted with the apps and games and draw a more complete picture of the concept. Like many of the other tactics employed, just be sure to keep things age appropriate for your child.

Collect Change For Big Savings

These days not many people see the value in a nickel. From couch cushions to sidewalks, it seems to take at least a quarter to get someone to bend down and pick it up; I myself only stoop for silver, no copper.

Maybe our generation is still suffering the trauma of hours spent kneeling in front of the coffee table counting and stuffing coins into little paper tubes. Today however, there are ways to make tossing pocket change into a jar pay off! Kiosks like Coinstar take a percentage of your savings in exchange for allowing you to dump your pile of coins into a tray rather than the tedium of rolling them up.

If any people among us have they eyes for spotting coins on the ground or seeing the value in a nickel, it’s our children. Turning everyone else’s pocket change into a candy bar or new package of crayons is an excellent way to share the lesson of the value of money in all shapes and sizes. You can even have fun with this one and have change hunts around the house or park!

Set A Good Example

More than simply sharing your finances, setting a responsible spending example is crucial to helping children understand how to manage money. Our children take their cues from what they see us do, and impulsive spending, cooking credit cards, and not taking care of purchases send the wrong message.

We want our children to grow up to be financially independent, and in many cases even more so than we are. By setting the right example you increase the odds that your child associate proper money management with being a responsible adult. Be sure to share with your child the reasons behind some of the financial decisions you make as either an individual or as a part of the household.

Opting to wear a dress that you already own versus buying that new one, even though it 50% off, will demonstrate that sometimes just because we can do something, doesn’t mean that we should.