How to Teach Kids to Save Money

As adults, we know that saving money is one of the best things we can do for our future. But getting your kids on board is not always easy. For most children, the idea of setting money aside sounds boring – they’d much rather spend it on toys and candy!

To make parenting easier and help your children learn this important skill, we’ve rounded up the most fun saving methods for kids of all ages. With these tips, the whole family will get excited about growing their savings and develop a life-long habit that could change your children’s financial future.

How to Explain the Importance of Saving

Many times, it’s tough to get kids to do certain things – like eating their veggies, brushing their teeth, or going to bed early. These are all on your kids’ list of least favorite activities.

But as a parent, you don’t let them get their way. You take the time to explain the health benefits of eating broccoli. You make special recipes to make these greens taste yummy, and you make sure your little ones see you eating lots of broccoli (even when you’d rather have a slice of pizza).

The technique to get your kids into saving is no different: First, you have to explain what savings are and why they’re good for you. Then, you turn it into an appealing activity. Finally, you lead by example by ensuring your kids see your good saving habits.

What Is Saving?

When you introduce the topic of savings, it’s only natural for your child to ask what saving is. When this question comes up, the key is to keep your explanation simple:

Saving is when you take some of your money and, instead of spending it right away, you set it aside to use later.

Of course, you’re dealing with a smart kid who’s full of questions. This simple explanation will most likely raise many follow-up questions. Here are some of the things your child may want to know about saving and some answers that you may find helpful:

Who needs to save? This one’s easy: everyone! Setting money aside for the future is an important habit for anyone who receives money. If you get a paycheck or an allowance, part of your money should go to savings.
When do I start saving? You can start saving any time, but the sooner you get started, the better because this means you’ll have more time to grow your savings.
How much should I save? The amount of money you save depends on how much money you earn, how much your expenses add up to, and how much you need to set aside to meet your goals. But, as a rule of thumb, you should aim to save 10% of your earnings.
Why is it important to save? This is the best question of all! Saving is important because it helps you prepare for emergency situations. But what will really get your kids excited is knowing that you can also save to buy something you really want, like a new bike.

Smart Saving Habits

When you help your kids turn saving into a habit, you’re setting them up for financial success. And the best part about it is that by starting young, your child will have more time to grow their nest egg and prepare for the future. The following are some tried and tested ways for you to get your kids into saving:

Explain Wants and Needs

Understanding the difference between wants and needs is the basis of making smart money decisions. Before buying milk and cookies at the store, take a moment to talk to your kids about which of these items is a need and which is a want. Your kids will quickly catch on and think twice before blowing their allowance at the toy store.

Help Them Reach Their Goals

Kids love challenges, so why not turn savings into a fun challenge? Start by setting a goal that’ll keep them motivated. It could be saving up for a video game or movie tickets. Then, help your child figure out how much money they need to set aside every week to make it happen. Once they’ve reached their goal, your kids will feel proud of themselves and inspired to do it again!

Set Them Up With a Piggy Bank and a Ledger

Tracking expenses and having a place to set money aside are key to your child’s saving success. Think of them as easy hacks that your child will enjoy!

With a ledger, they can keep an eye on how much they’re spending and get a better understanding of their choices. With a piggy bank, they’ll have a place to keep their savings and feel less tempted to spend. And when your child gets older, you can open their first checking account and introduce them to banking.

Keep the Conversation Going

Unlike some adults, most kids love to talk about money. They don’t have emotional hang-ups toward finance, so this is the time to make money part of your dinner conversation. Some good topics to discuss include:

How to get back on track with your savings
What are some good saving goals for each family member
How interest can help your money grow
Why is an emergency fund so important

What Not To Do

Just like your child can pick up good saving habits, they can also learn negative behaviors toward money. These are some of the things parents should avoid to support their children’s financial education:

Don’t make impulse purchases
Try not to get into debt
Steer clear from overconsumption
Do not attach negative emotions to money
Avoid turning savings into a chore

How to Set a Good Example

You are your child’s role model. That’s why it’s so important for you to show them good saving habits while they’re still young. This will make saving part of their education and their lifestyle.

To set a good example, you can start with the following:

Track your own spending
Set a budget
Share your savings goals with your kids
Monitor your progress toward your goals
Celebrate your financial achievements
Let them know when you’re paying your bills
Talk about money often

Saving Definitions

Making financial terms part of your family’s vocabulary will help your child feel familiar and comfortable with money. These are some words that kids of all ages should know:

Earn: To make money. You can earn money through a salary, investments, or an allowance.
Needs: Something you must have for everyday life. Examples include food, water, or school supplies.
Wants: Things you would like to have but don’t necessarily need. For example: toys, ice cream, or headphones.
Spending: Using money to pay for things. These could be wants or needs.
Interest: Money that the bank pays people when they deposit into their savings account.
Budget: A plan on how you will spend your money. This helps you stay on track with your savings and your bills.

Books for Parents to Learn About Saving

We’ve rounded up our favorite books about saving to support your child’s financial education. These great reads will help you get the conversation started, brush up on your own knowledge, and feel more confident about personal finance. Head over to our entire kids’ money books library to pick out more great reads for you and your kids!

Best for Younger Kids

My First Money Book is exactly what it sounds like: your guide to setting good financial foundations for your little one. It features rhymes and illustrations that make it fun and easy for kids to grasp complex financial concepts. It starts with saving, but also goes on to talk about sharing, spending, and investing for a complete parenting tool that you’ll also enjoy reading.

Best for Older Kids

Times have changed, and kids today have different needs than when you were a child. Not Your Parents’ Money Book is financial education for today’s economy. With a modern approach, this book helps parents teach their kids how to save and manage their money in an engaging way.

Best Real-Life Approach

Ever wondered what financial experts teach their kids about money? Dave Ramsey and his daughter, Rachel Cruze, demystify kids’ financial education in Smart Money Smart Kids. This bestseller is filled with practical tips and personal stories about raising money-savvy children. It provides valuable lessons that you can make your own to help kids learn the importance of saving, planning, and living a financially purposeful life.

Best for Parents

If you struggle with saving your own money and want to set a good example for your kids, it’s time to read Save or Slave. This book focuses on financial freedom and teaches important lessons that you can then pass along to your children. It’s practical and easy to apply to everyday life, but its effects on your personal finances will be significant.

Best for Investing

Does your child want to invest their savings? Great! Grab your copy of Go! Stock! Go! and start learning all about the stock market together. This handy tool is perfect for beginners who want to understand the fundamentals of investing to make smart decisions and find a good advisor to help them reach their goals.

Best for College Savings

If your family’s goal is to save for their education, you need to understand college saving plans, and Route 529 is the best book to guide you. It helps you understand how they work, what it means to choose the right plan, and ways to plan for the cost of college. With the strategies in this book, you can help your child graduate debt-free, and with the education they need to succeed.

A Lifetime of Saving Awaits

Teaching your kids about saving their money can be tricky, but you can make it stick with these tips! By making savings and investing part of your family habits, you can raise financially intelligent kids who will one day reap the rewards of their savings.

For Parents

How to Teach Your Kids About Saving