Help your kids be prepared for becoming an adult by teaching them money lessons. The biggest one? Teach your kids to save money.
As parents, our job is to raise our kids and prepare them to eventually leave our home and become stable, successful adults on their own. Part of being a successful adult is knowing how to manage and save money.
Teaching your kids to save money and live within their budget is the most important money lesson you can give them.
If you help your kids learn how to save money, then they will be well on their way to becoming successful adults!
How to teach your kids to save money:
Talk about wants vs. needs
First, you need to help your kids understand the difference between wants and needs. Adults can have trouble with this!
Everyone’s basic needs are:
- clothing (basic not designer)
Some other needs might include work-related necessities (transportation, work uniform, etc.).
Some examples of wants:
- the latest iPhone
- most expensive car
- designer jeans or shoes bought at full price
- biggest, best house
Your kids need to know the difference between needs and wants and how to live within their means (budget). We all have the ability to choose – we just need some self-discipline at times.
Show them the value of delayed gratification
When your kids understand needs vs wants, then they can begin to see the benefit of waiting for what they want.
Teach your kids that if they spend money on a trinket now, they won’t have enough for the more expensive item (or event) later. If they learn to have self-discipline about spending, they can eventually have the more expensive item they want later on.
Waiting and saving for a big purchase:
- teaches the value of hard work
- gives a sense of satisfaction when you reach the goal
- helps strengthen your self-discipline
- sets your kids up for future success in other areas of life
Let them earn and use their own money
For younger kids, you can give them money (through a weekly allowance or chores).
For older kids, encourage them to get a job or find a way to make extra money.
Don’t buy everything your kids want (especially your teens). Make them pay for some wants with their own money. Then, they learn to appreciate the cost of the item and the work needed to obtain it.
Set a savings goal
Forcing your kids to save money without a reason (that they think is important!) can be frustrating to them.
If they come up with their own goal (like buying a toy, video game, or special pair of shoes) and then work toward it, this can be a great motivator!
Be sure to teach them how to break up the goal into smaller steps to reach the total. For example, saving $5 a week for 5 weeks for a $25 item.
Start with a small, easily achieved (and highly desired) savings goal.
Get your kids to:
- write the total goal down
- determine how much they need to save (each week)
- understand how long it will take
Make it highly visual! Get a poster board and create a timeline – like those savings thermometers that you see for organizations. Be enthusiastic and help them mark off each weekly goal!
Show them how many chores it will take for them to do (or hours to work) to reach their goal.
For older kids, you can give them an added incentive by matching their savings contribution (like employer 401K matches!). You can do this for a big purchase – like a computer or car – and adjust it to fit your own budget (matching 10% to a certain amount, or more if you are able and choose to do so).
Give them a place to save money
For young kids, you can set up a clear savings jar and help them put their money in to save for a small goal.
For older kids, open a checking and/or savings account and teach them how to make deposits and check their balance.
Teach the basics of budgeting
When your kids get their first job, teach them how to budget (and include how to track spending too). Budgeting skills are vital to financial success as an adult.
Related: Prepare your teen for a first job
Talk about Money in Real Life
Have daily conversations about real-life financial situations. Life itself will provide numerous opportunities for you to talk about money and savings with your kids.
Talk about real-life financial situations:
- family budgets
- emergency funds
- student loans
Teach them ways to save:
- with coupons
- buying on sale
- comparison shopping
Related: How to set up an emergency fund
Related: How to graduate college debt-free
You can use normal everyday experiences and talk about your own finances as well (if you don’t want to use actual numbers you can talk about percentages: I try to keep my grocery spending to 20% of my total budget.)
Be a role model
If you go out and buy the latest gadgets that you can’t afford and live beyond your means, then your kids will learn by your example.
BUT, if you explain how you are saving up money each month for a larger purchase (downpayment on a house, a newer car, etc.) then your kids will see and learn by your example.
As a mom, I want to make sure my girls are well-prepared when they become adults – especially financially. One of the best financial lessons I can give is to teach my kids how to save money. I’d love to hear ways that you’ve taught your kids to save money!