It's never too early to help your child understand the importance of saving money. Starting small is just fine-just start.
1. Get him or her a piggy bank
Kids will want some place to collect their change and watch it accumulate. A piggy bank offers a way to make saving fun and functional.
2. Ask your child to save for a future purchase
An item purchased with your own money is usually more prized. If your child wants something in particular, consider encouraging him or her to save for it. If the item is pricey, you could consider offering to pay half.
3. Consider setting up a savings account
For older children, a savings account may offer not only a safe place to keep money but also an opportunity to begin understanding the basics of financial literacy, including interest, deposits, withdrawals and the like.
4. Match your child's savings
Consider matching your young child's contributions dollar for dollar to encourage saving. For older children, the match may be more reasonable at 50 cents or 25 cents on the dollar.
5. Try to save money in front of your kids
Monkey see, monkey do. Consider setting an example for your children by taking them with you to the bank where you deposit your own money into a savings account. Similarly, you may want to set up a change jar at home where you can toss spare change and where they can see the pile grow. Once the change jar's contents have reached the top, ask your child to help you roll the coins for deposit in the bank.
6. Praise your child for saving
Positive reinforcement can go a long way. As your child contributes to his or her piggy bank or savings account, be sure to praise that decision. Express your pride in your child's efforts to save for the future rather than splurge in the present.
7. Encourage your children, even if they do splurge
Despite your best advice, your little ones will probably splurge on something other than what they were saving for. They may have regrets later and that's where you can play a role. Encourage your child to start saving again, after she or he has learned from the past rash decision making.
8. Share your own stories
Tell your children about the things you saved up for as a child or are saving up for now. Tell them the steps you're taking to save for their college fund or for a family vacation so they understand how saving continues in all stages of life, whether the planned purchase is small or large.
9. Use variety when paying allowances
If you're paying your child for chores done around the house or as part of an allowance, consider using a variety of change or bill denominations. For very young children, this process helps them understand the different monetary values. For older children, this may make it easier for them to put some away in savings while spending or donating the rest.
10. Help your child create a budget
Introduce your child to the concept of a budget by helping them to create one. Using their allowance, help them to allot some of their dollars for gifts, some for entertainment and some for savings. This can help reinforce the necessity of saving even if you must continue to spend.
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
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