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Teach Your Child to Save Money

Most children see money as a way to buy the things they want. Banks are seen as a source of endless money or an institution that takes your money and doesn’t give it back. The concept of saving money isn’t a thought in their minds. So, how can you teach the concept of saving for their future or for larger purchases they want to make?

Let’s break it down through age groups.

Young children should be taught about saving money through a clear piggy bank. That way every time money is placed in their bank they can visually see the money grow. Whether you are paying them an allowance or placing your loose change in the jar, the child should be a part of placing the money in the jar.

Once you have at least half of the jar filled, take the money out and show them the empty bank, “This is what your bank will look like without money. EThe empty bank will encourage them to continue to save their money. Before you place the money back in the bank, count how much money there is. Write the total money saved on a piece of paper. The next time the two of you go to a store bring the paper with you and ask your child to find the toy they would truly like to have one day (usually this toy will cost more than the change in the jar). Help your child to understand the difference, “You have $5.50 in your bank, the item you have picked out costs $19.95, so to buy this item you will need to save another $15.00(include the tax).

Once your child has saved enough money to purchase the item, allow them to buy it (this will teach them the awards they receive when they save their money).

Main points to address:

  • Have them keep a clear piggy bank so they can watch it grow.
  • Allow them to pick a toy from the store they have always wanted and write down the amount of the toy, this will give them a goal to reach for.
  • Allow them to purchase the toy, budget allowing, so they can see the benefits of saving money.

Grades K-3rd
When it becomes a hassle attempting to teach your child to save, give him or her the option of you matching the amount of money they save over a course of time. This will help to motivate your child to save. You can either match 100% or 50% of the money they save. For 100% you would give them dollar for dollar (they save $10, you match that and give them $10). If you offer them a 50% match, you would give them 50 cents per dollar they save (if they save $10, you would then give them $5.00).

Remind them of the items they have wanted to purchase and give them the option to buy the item once they have the amount needed. You can also have them save their money in a clear piggy bank so they can watch their money grow.

Main points to address:

  • Match 50-100% of your child’s savings.
  • Allow them to purchase an item they are saving for so they can enjoy the benefits of saving.
  • Browse the isles at toy stores so they can get an idea of the costs of various toys, (This toy costs $15.99, this one is $35.00, etc.)
  • Allow them to set a goal of money they would like to save (Goal is to save $100.00 to buy a game console, etc.)

Grades 4th-6th
With older school-aged children it is a good idea to have them start a bank account. Find a bank that has children’s savings accounts and have them put so much of their birthday money or allowance they make into the account. You can have them put a percentage away, such as 40% of their weekly allowance and 40% of all gifts into the bank and have them save for a certain amount of time, like two months, before they can begin to withdraw money. Put a limit on how much they can withdraw and how much they have to keep in the bank at all times (like they can withdraw so much out to purchase something, but they have to leave in at least $50.00) You can even have these settings mandatory at the bank, that way if your child attempts to withdraw more then they are supposed to the bank will deny the withdrawal.

Just like the examples for grades K-3rd, you can also match the amount your child has saved (see above).

Keep the checkbook or other balancing books up to date to show how much money your child has saved throughout those first few months. You should also explain how to balance their savings account with deposits and withdraws (see Teach Your Child to Balance a Checkbook).

Main points to address:

  • Match the amount your child saves.
  • Set a limit on the percentage of money they have to save from gifts, allowance, or a job they conduct.
  • Teach them how to balance a checkbook.

Resources that can help you in your venture include:

Posted in Education.

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