Teaching them the importance of saving their money should therefore start from young and you can do this by beginning with a piggy bank where they can see their money ‘deposited’ for safe keeping.
A good idea might be to teach them to save for something they would like to have and as they make their ‘small deposits’ let them watch the money grow until they can purchase their item. When children see their savings build quickly, it helps to reinforce the value of saving.
As the child grows, you can then start them with a bank account. Parents might also need to put a limit on their “self-spending.” This can be done by teaching them the importance of helping others with their money. For instance, for each toy your child buys for himself, teach him to contribute a percentage of the purchase amount to a local charity.
You can also help him better understand the concept of giving to charity by having him help you pick out a project to support. Set a good example, even when you don’t think your kids are watching.
In addition to taking the time to explain the concept of credit in a child friendly way, also remember to make wise credit choices yourself.
If you’re comfortable, let your child see you making a credit card bill payment and get them involved in paying bills.
Where To Save
Some banks have special saving accounts for children and this is a good place to help them get started with saving their money.
Credit Unions also offer special saving acounts for young children.
Insurance is a different way to save and you can allow your child to learn how insurance works towards their savings.
Saving Tips for Children
Encourage your child to open a savings account and encourage him/her to deposit a portion or all of the money that he/she might get from family members.
For every dollar your child saves, offer to put in a matching contribution. When they are little, you might be able to match 100%. Once they are older 25% or 50% might be reasonable to encourage them to save.
Track the interest earned with them.
Encourage Them to Set Goals.
If they want to purchase an expensive toy, you can assist them by keeping track of the amount they need and what they have and let them see the money increase towards the targeted amount.
Encourage children to identify fun things to spend their money on. For older children, prioritizing the list can be a helpful challenge.
Save Money in Front of Your Children
Keep your own piggy bank or deposit money in the bank when you are with your children. Explain what you are saving for and your children will mimic your behavior.
Help Them Spend Money
Occasionally, children will get so focused on saving their money, that they won't spend any money along the way.
Help them enjoy their money by spending some on small purchases or surprising them by buying something they'd like.
Praise your child for any amount of savings.
Encourage your child to keep saving even if he wastes his money.