Teaching children to save money is an essential skill in life and an ever-evolving process even as they enter adulthood. A study by Bankrate indicates that 27% of adults have no savings. Teaching young people to save early sets them up for financial success for life and puts them in the driver’s seat to make decisions for their future. Teaching them to save will also help them with other life skills, including reasoning, decision making, patience, acceptance, sacrifice, math calculations, budget skills, and more.
Saving as They Grow:
The following are basic ideas for helping them learn and grow in their savings knowledge.
Preschool Children
Give them spare change to put in a “piggy” bank. Once the piggy bank is full, allow them to take the piggy bank change to buy a simple toy or snack. This helps them physically see the money coming in and out of the piggy bank, and that there is a reward for saving. You can also show them that they can keep some of the money in the piggy bank to save for later.
Elementary Youth
- Help youth identify what money is (i.e. different bill types and coins and electronic funds transfer methods). This reinforces how much something costs and how money works.
- Start an “envelope system” by having youth break their earnings into different envelopes by categories. Examples of categories include spending, giving, and saving. This creates a visual for early learning about budgeting.
Begin the conversation on “needs” vs. “wants”
- Take them grocery shopping to compare prices and options of different items
- Talk about the differences and “spending within your means”
- Start working on “savings goals” and help them identify why they need to save and how long it can take depending on different saving scenarios.
- Write down the savings goal
- How long will it take
- How much they are going to save on a weekly basis
- Determine where the funds are going to come from (allowance, chores)
Doing this is a visual reminder promoting better understanding of how savings over time can lead to financial success.
Middle and High School Youth
Connect young people with a local bank
- Learn about different services and accounts
- Open an interest-bearing account for their savings
- Create a budget for their income and expenses
- Discuss the amounts they can spend and save
- Introduce them to positive financial habits.
- Doing so will help them become independent adults responsible for their financial habits.
- Help youth understand that “income” can change depending on different ages and stages in life.
- Talk with them about events that can change income amounts. For example, a downturn in the economy, disability, moving to another state, marriage, divorce, retirement, etc.
Help Youth Save
Encourage youth to save by encouraging them to save a percentage of the funds they earn or receive. The following are potential ideas for income to save.
- Allowance for doing household or outside chores
- After school and/or summer job
- Gifts of money for holidays or birthdays. Ask close family members if they want to contribute and be involved.
- Offer incentives such as paying them to read books outside of school, teaching a sibling to do a chore or playing an instrument, cleaning a yard, etc.
- Sell items they no longer use (old toys, books, or games, etc.) to save for new items.
- Encourage them to be an entrepreneur by starting a business selling lemonade, baked goods, craft projects, or lawn maintenance, etc.
Teaching youth to save helps empower them to make wise financial decisions, provide life skills, and balance for their financial and emotional well-being throughout their lifetime.
Great ideas!