19 Top Saving Techniques for Kids Every Parent Should Teach

Teaching kids about money and saving from an early age is crucial for their financial literacy and future success. However, this task can seem daunting for many parents. The good news is that it doesn't have to be. With the right approach, teaching your children the importance of saving can be an enjoyable and rewarding experience for both of you. Here are the top saving techniques every parent should teach their kids, ensuring they develop healthy financial habits that will last a lifetime.

1. Start with a Piggy Bank: The First Step to Financial Awareness

One of the simplest yet most effective ways to introduce children to the concept of saving is by giving them a piggy bank. This tangible approach allows kids to physically see their money grow over time. Choose a clear piggy bank so they can watch their savings accumulate, which can be very motivating.

How to Do It:

• Explain the Purpose: Make sure your child understands that the piggy bank is for saving money for future needs or wants.

• Encourage Regular Deposits: Whenever your child receives money, whether it’s an allowance, gift, or earnings from chores, encourage them to put a portion into their piggy bank.

• Celebrate Milestones: Celebrate when the piggy bank is full or when they reach a certain amount. This reinforces the positive habit of saving.

• Start Early: Introduce the piggy bank concept as soon as your child begins to understand basic numbers, usually around age three or four.

2. Set Savings Goals Together: Making Saving Fun and Achievable

Setting savings goals is an excellent way to teach children about the importance of saving. By having a specific goal, kids are more likely to understand the value of saving and stay motivated.

How to Do It:

• Discuss Their Interests: Find out what your child wants to save for, whether it’s a toy, a game, or even a future outing.

• Set Realistic Goals: Help them set achievable savings goals. For younger children, short-term goals work best, while older kids can handle longer-term goals.

• Create a Savings Chart: Visual aids like a savings chart can help track progress and keep them motivated.

• Break Down Goals: For bigger goals, break them down into smaller, more manageable milestones to keep your child encouraged.

3. Use a Savings Jar: Visualizing Progress

Similar to a piggy bank, a savings jar is a great visual tool to help children see their money grow. Clear jars are particularly effective as they provide an immediate visual representation of their savings.

How to Do It:

• Label the Jar: Use a label to indicate what the savings are for, reinforcing the purpose.

• Add Regularly: Encourage your child to add to the jar regularly and watch it fill up.

• Count Together: Periodically count the money together to see how close they are to their goal.

• Decorate the Jar: Allow your child to decorate their savings jar to make it more personal and fun.

4. Match Their Savings: Encourage Consistent Efforts

Matching your child’s savings can be a powerful incentive. It shows them that you value their effort and reinforces the habit of saving regularly.

How to Do It:

• Set a Matching Rate: Decide on a matching rate, such as matching every dollar they save with an additional dollar.

• Consistent Matching: Be consistent with the matching to maintain motivation.

• Use Matching as a Reward: Use the matching as a reward for reaching specific milestones or goals.

• Teach Delayed Gratification: Explain that saving over time can yield greater rewards through matching, reinforcing patience.

5. Create a Simple Budget: Teaching Basic Money Management

Budgeting is a fundamental financial skill. Teaching your child how to create a simple budget can help them understand how to manage their money effectively.

How to Do It:

• Break Down Their Money: Teach them to divide their money into categories such as spending, saving, and giving.

• Track Spending: Help them track their spending to see where their money goes.

• Adjust as Needed: Review and adjust the budget together to ensure it’s working for them.

• Use Real-Life Examples: Share your own budgeting experiences and discuss how you manage household finances.

6. Introduce the Concept of Interest: Rewarding Their Patience

Explaining interest can help children understand the benefits of saving over the long term. You can introduce this concept in a simple and engaging way.

How to Do It:

• Explain Interest: Describe interest as a reward for leaving their money in savings.

• Simulate Interest: If they save a certain amount for a specified period, offer to add a small percentage to their savings as interest.

• Use Real-Life Examples: Show them how interest works using examples from your own savings or investments.

• Compound Interest: For older children, explain the concept of compound interest and how it can significantly increase their savings over time.

7. Open a Savings Account: Real-World Experience with Banks

When your child is ready, opening a savings account can provide them with real-world experience in managing their money. It also helps them understand how banks work.

How to Do It:

• Choose the Right Account: Look for a child-friendly savings account with no fees and a decent interest rate.

• Visit the Bank Together: Take your child to the bank to open the account, making it a special event.

• Monitor Together: Regularly review the account statements together to track their savings and interest earned.

• Teach Online Banking: If appropriate, introduce them to online banking to track their savings and learn about digital finance.

8. Discuss Wants vs. Needs: Prioritizing Spending

Helping children distinguish between wants and needs is essential for developing smart spending habits. This skill will serve them well throughout their lives.

How to Do It:

• Define Wants and Needs: Clearly explain the difference between wants (things they would like to have) and needs (essential items).

• Use Real-Life Examples: Use examples from everyday life to illustrate the concept.

• Encourage Thoughtful Spending: Before making a purchase, ask your child if it’s a want or a need.

• Practice Decision Making: Give them scenarios where they have to choose between a want and a need, discussing the implications of each choice.

9. Set Up a Chore-Based Allowance: Earning and Saving

A chore-based allowance teaches children the value of earning money and the importance of saving a portion of what they earn.

How to Do It:

• Assign Age-Appropriate Chores: Choose chores that are suitable for your child’s age and abilities.

• Set a Fair Allowance: Determine a fair amount for each chore.

• Encourage Saving: Encourage your child to save a portion of their allowance regularly.

• Link to Goals: Help them see how saving their allowance can help them reach their savings goals faster.

10. Use Financial Games and Apps: Making Learning Interactive

There are many educational games and apps designed to teach kids about money and saving in a fun and interactive way.

How to Do It:

• Choose Age-Appropriate Games: Look for games and apps that are suitable for your child’s age and interests.

• Integrate Learning: Use these tools to supplement your teaching and make learning about money more engaging.

• Discuss Lessons Learned: After playing, discuss what they learned and how it applies to real-life saving.

• Monitor Screen Time: Ensure that the use of financial games and apps is balanced with other educational activities and playtime.

11. Lead by Example: Modeling Good Saving Habits

Children often learn by observing their parents. Demonstrating good saving habits yourself can be one of the most effective ways to teach them.

How to Do It:

• Share Your Savings Goals: Talk about your own savings goals and how you plan to achieve them.

• Demonstrate Smart Spending: Show them how you prioritize needs over wants and make thoughtful spending decisions.

• Include Them in Discussions: Involve your children in family financial discussions to give them insight into real-world money management.

• Practice What You Preach: Consistently demonstrate the saving and spending behaviors you want your children to adopt.

12. Involve Them in Family Financial Decisions: Practical Learning

Including your children in appropriate family financial decisions can provide practical learning experiences that are invaluable.

How to Do It:

• Discuss Family Budgeting: Explain how the family budget works and involve them in planning.

• Set Family Savings Goals: Work together to set and achieve family savings goals, like saving for a vacation.

• Encourage Input: Encourage your child to give input on financial decisions, reinforcing their understanding and involvement.

• Teach Responsibility: Assign them small responsibilities within the family budget to build their confidence and understanding.

13. Teach Them About Opportunity Cost: Making Smart Choices

Opportunity cost is a key economic concept that helps children understand that choosing one option often means giving up another.

How to Do It:

• Explain Opportunity Cost: Describe it as the trade-off between two choices.

• Use Real-Life Examples: Show them examples in their own lives, such as choosing between two toys.

• Encourage Thoughtful Decisions: Help them consider the opportunity cost before making spending decisions.

• Play Decision Games: Create simple decision-making games that illustrate opportunity costs and discuss the outcomes.

14. Create a Savings Challenge: Engaging Their Competitive Spirit

A savings challenge can be a fun and engaging way to motivate children to save more.

How to Do It:

• Set a Challenge: Create a challenge that’s appropriate for their age and interests, like saving a certain amount within a month.

• Offer Rewards: Provide small rewards for meeting milestones or completing the challenge.

• Make It Fun: Keep the challenge fun and exciting to maintain their interest and motivation.

• Involve Friends: If possible, involve their friends or siblings in the challenge to add a social and competitive element.

15. Share Stories of Successful Savers: Inspiring Real-Life Examples

Sharing stories of successful savers can inspire children and show them the real-life benefits of saving.

How to Do It:

• Use Real-Life Examples: Share stories of people you know who have successfully saved money and achieved their goals.

• Highlight Benefits: Emphasize the positive outcomes of saving, like buying a desired item or funding an education.

• Encourage Discussion: Discuss these stories with your child and talk about what they can learn from them.

• Create a Savings Scrapbook: Compile stories and examples into a scrapbook or journal that your child can look back on for inspiration.

16. Utilize Educational Resources: Books and Videos

There are many books and videos designed to teach kids about money management and the importance of saving. Utilize these resources to complement your teaching.

How to Do It:

• Select Age-Appropriate Materials: Choose books and videos that are suitable for your child’s age and comprehension level.

• Interactive Learning: Engage with the material together, asking questions and discussing key points.

• Library Visits: Make trips to the library to find new resources and encourage a love of learning about money.

17. Practice Delayed Gratification: Building Patience

Teaching children to wait for something they want can be a valuable lesson in patience and saving.

How to Do It:

• Set Waiting Periods: When they want something, set a waiting period during which they save for it.

• Discuss Benefits: Explain how waiting and saving can lead to better choices and greater satisfaction.

• Reward Patience: Acknowledge and reward their patience with praise or a small treat to reinforce the behavior.

18. Encourage Giving: Teaching Generosity

Incorporating a giving component into their financial education helps children understand the importance of generosity and sharing.

How to Do It:

• Set Aside Giving Money: Encourage them to set aside a portion of their money for charity or helping others.

• Discuss Charitable Goals: Talk about different causes and let them choose where they want to donate.

• Lead by Example: Demonstrate your own giving habits and involve them in family charitable activities.

19. Create a Financial Literacy Plan: Structured Learning

Develop a structured plan for teaching financial literacy that evolves as your child grows.

How to Do It:

• Age-Appropriate Topics: Introduce concepts that are appropriate for their age and gradually increase the complexity.

• Regular Lessons: Schedule regular lessons or discussions about money, saving, and budgeting.

• Evaluate Progress: Periodically review their understanding and adjust the plan as needed to ensure they are learning effectively.

Conclusion

Teaching your children the importance of saving is a vital life skill that will benefit them throughout their lives. By using these techniques, you can help them develop a healthy relationship with money and instill habits that will lead to financial success. Remember, the key is to make learning about money fun, interactive, and relevant to their lives. By doing so, you'll not only equip them with essential financial skills but also create lasting memories and strengthen your bond with them. Start today, and watch as your child grows into a financially savvy individual ready to navigate the complexities of the financial world with confidence.