Kids like to do things that are fun, and saving money can seem more like work and sacrifice than fun. So, here’s the challenge – how can you teach your kids to save money, and make it fun? If you don’t take the time to teach your children about money, someone else will. To make sure your children learn what they need to know to save and be financially prepared in life, here are some simple suggestions for you to use to show your kids that saving money doesn’t always have to feel like work. Start by setting an example. Kids live what they learn, and they learn by watching you, so set the example of paying with cash, not plastic, whenever possible. This will help teach them how not to spend more than they have, or live within their means, in other words. If they don’t have it, they can’t spend it. Teach your kids that living within your means is a crucial key to saving money and the best way to avoid debt.
1. Pay commissions, not allowance. As Dave Ramsey says, “Don’t just give your kids money for breathing.” Reward your children monetarily by paying them for the chores they do around the house like doing the dishes after dinner, cleaning their room, or helping with yard work. This teaches your kids that money is earned. No one is just going to give them money later in life, so teach them early that the reward of work is cash to buy those things they want, like toys.
2. Show the kids how to start saving. Make it fun by making it visual using a clear glass jar. Actually seeing the money build is inspiring, and once they start it’s fun for them to see how fast they can fill the jar. If there’s a sibling, you could even have them compete to see who can fill their jar the fastest. As a benefit for you, that means they may come seeking additional chores as a way to make more money. Less work for you, more savings for them. It’s a win-win!
3. Teach your children to give. Kids have great hearts for helping others, and that’s a wonderful quality to nurture. Teach your kids to split the money they earn into three categories; saving, spending, and giving. As they watch their savings grow knowing soon they’ll have the money to buy that thing they want, while still having some money to spend in the interim, having a third category will inspire them to look for ways to help others.
4. Put your money where your mouth is. Offer to match your child’s savings when they reach a certain goal. The younger the child, the smaller the goal can be ($20 for a 10 year old, but maybe $50 to $100 for your teen). Once your child has reached the goal, match their funds with your own and their savings have just doubled. Now that’s a way to build incentive!
5. Reward them along the way. If your child has a goal of saving $100 for something, help build their enthusiasm for reaching that long term goal by offering rewards in the short term, such as when they reach $25, or a quarter of the way toward their goal, you’ll take them out for ice cream (your treat!). At the halfway point, offer a slightly larger reward, like a night at the movies. This will teach them that saving money can be rewarding in the middle of the process, not just when they reach their ultimate goal.
Teaching your children good money principles like saving, spending, and giving sets them up for financial success as adults, and that’s something you can be very proud of as a parent. School probably won’t teach them these principles, but you can start teaching them to your children as soon as they’re old enough to understand that they need money to buy things and do things they enjoy. By the time they start making an income of their own, they’ll be on solid financial footing to manage their money wisely, live within their means, and stay out of debt.