Consistent saving provides a ticket to life’s finer things. Saving doesn’t always come easily though, and the sooner this skill is developed, the better the chances for a secure financial future. Here’s how to help kids become lifelong savers.
Introduce saving early
Even preschoolers can begin to understand basic saving concepts. Introduce money as something you earn and use to buy things. Then explain the difference between wants and needs, and that you sometimes have to save to buy things. Setting an example by budgeting and saving is one of the best ways to help kids develop good money habits.
Bring saving into the real world for kids by giving them an allowance and a place to keep it. Provide separate containers for “saving” and “spending” and encourage kids to put a good slice of their allowance into savings.
To keep youngsters motivated, help them count their money and exchange coins for bills as their stash grows. Help them create wish lists with pictures of what they plan to buy with their savings.
Once kids reach school age they’re ready to take saving up a notch. As your child begins to accumulate cash, it’s time to trade up from those shoe boxes and open a youth savings account at a financial institution like AbbyBank.
This is also the time to upgrade the wish list to a goal chart, perhaps with boxes to put stickers in each time your child saves another dollar toward each objective. Have them include long- and short-term goals, so they don’t have to wait seemingly forever to feel rewarded. Let kids prioritize their objectives by importance.
You may want to provide additional incentives to make saving exciting. Consider a small cash bonus each time they reach a saving milestone: for example, an extra dollar for every $10 they save, or match their savings to help them obtain a special want.
Sometimes just playing can instill saving skills. Board games such as Monopoly illustrate the importance of saving to buy the better properties and win. A number of fun online games and activities are also available to teach saving and financial literacy at sites such as Mint and Rich Kid Smart Kid.
Encourage good habits
By their teenage years, children should have a good foundation for saving. Encourage them to find part-time jobs and to open savings and checking accounts to manage savings and expenses, perhaps jointly with you at first. To some degree though, it’s important to let teens make a few mistakes, to learn from them.
As teens develop larger and longer-term goals such as buying a car or going on a class trip, you may also want to introduce them to higher-yielding investments such as certificates of deposit, to help their savings grow faster. While setting an example of solid saving practices, offer kids encouragement and incentives to help them develop the habits that will enable them to reach any savings goal they set.
Roberta Pescow, NerdWallet