How to Get Kids Saving Money

1. DISCUSS NEEDS VS. WANTS

• Needs (Basics) – food, shelter, basic clothing, basic transportation, healthcare, education
• Wants (Extras) – movie tickets, candy, designer jeans and sneakers, smartphones, video games, etc.
• Be specific – designer jeans vs. regular jeans
• This allows you to explain the importance of prioritizing spending, leaving money for future necessities

2. LET KIDS EARN THEIR OWN MONEY

• In order to learn how to save & manage money, you have to have money
• Just “giving” money to kids will not teach them anything
• It’s important that kids EARN their own money
• Should you pay for chores? – It’s ok to pay for chores, but not all. Be sure your child is doing things around the house that they are not being paid for. This is their contribution to the family. Everyone doesn’t something for the family.
• Get creative with other ways to earn money

3. SET SAVINGS GOALS

• Just telling a child to save money, without an explanation, will seem pointless to them
• Help your child define a goal, or multiple goals (depending on age)
• Once they have their goal, have them write it down where they can see it
• Then help them break it down into bite size pieces, this will help with the success rate

4. GIVE THEM A PLACE TO SAVE

• When kids have a savings goal in mind, they need a place to stash their cash
• Younger kids: piggy bank, jar system, envelopes, etc. – make these items clear so that they can SEE the money growing (getting higher). This is important at the younger ages.
• Older kids: it’s time to introduce them to the bank

5. HAVE THEM TRACK SPENDING

• Being a better saver means knowing where your money is going
• This is easily done with a bank account statement or debit card
• Create a manual system when they are younger, it doesn’t have to be complicated
• There are several apps that can track spending, but do your homework (they can have expensive fees)

6.  OFFER SAVINGS INCENTIVES

• Do you like incentives? – So do kids!
• Afterall … who doesn’t like FREE MONEY!!!
• This can also be a great strategy if you are having problems getting your kids to start saving or they are saving for something bigger (i.e. $400 tablet)
• You can offer to match once they hit a certain percentage
• You could offer a reward once they hit a savings milestone (halfway, etc.)

7.  LET THEM MAKE MISTAKES

• This is a tough one for parents, but essential to the process
• Part of putting kids in control of their own money is so they make mistakes now
• You will want to step in when you see a costly mistake about to happen, but make it a teachable moment instead
• It will be cheaper now than later

8.  ACT AS THEIR CREDITOR

• We want kids to learn to NOT live beyond their means
• They need to understand that not being patient will cost them more
• Let’s say they want to purchase something that is $100 and they just can’t wait
• Suggest that you can “lend” them the money, but with interest
• If they can wait and save the money, it will cost less – delayed gratification
• Don’t do this all the time, but try it a few times so that they can see how much extra money it will cost to not wait! Be sure to keep track on paper so they can see it.

9.  TALK ABOUT MONEY

• A 2021 T. Rowe Price survey said 41% of parents don’t like to talk to their kids about money
• We know financial literacy is not taught in schools
• If you don’t talk about money, how will they learn
• By age 3, kids understand basic money concepts
• By age 7, many money habits have already been set

10.  BE A GOOD EXAMPLE

• That’s right … lead by example
• You can teach your kids something, but if they see you do something else, that is what they are learning
• If you want to teach them to save, show them how you are saving & why you are saving
• If you are not saving, it’s never too late to start
• Let kids be a part of the family money conversation