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10 Ways to Teach Kids of Any Age to Save Money

Apr 12, 2019 | 5 minute read


For many of us, we learned the importance of saving money the hard way through trial and error. Given the value financial skills and knowledge plays in navigating life successfully, it’s surprising this isn’t a common subject taught in schools.

When it comes to saving money, us parents could use some financial education ourselves. According to the Federal Reserve Bank of New York, as a whole, Americans owe $13.5 trillion in debt as of late 2018; some of the largest categories include $1.5 trillion in student loan debt, $1.3 trillion in auto loan debt, and $225 million in credit card debt.1 In order to help the next generation avoid these similar mistakes, it’s incredibly important to teach kids about money essentials.

Below are some tips and tricks you can use to prepare your kids to spend and save money wisely:

  1. Start early. Teach your kids the importance of saving as soon as possible to help them form good habits. In fact, children as young as three years old, roughly around the age of when they learn to count, can understand the concept of money.2 For children under ten, start by teaching the fundamentals: earning, spending, and saving. Once they seem to grasp those concepts, start to incorporate more real-world scenarios such as: debt, interest, and investing at the most primitive level. For example, if your child asks to borrow money, consider adding accruing interest to their final payment.
  2. Compensate them for doing chores. Introduce basic budgeting skills by giving your child opportunities to earn money by doing chores around the house. Earning an allowance is a key component to learning about finances as it teaches the value of a dollar. Each week, assign chores and pay your child accordingly for the completed tasks.
  3. Explain the difference between needs vs. wants. A need is something that a person must have in order to survive, such as: food, shelter, and clothing. Whereas a want is a desire but is not a priority to have such as: the latest tech gadget, fashion accessories, and a vacation getaway. Understanding the differences between these two concepts is key to developing good spending habits.
  4. Write out savings goals. Reinforce the idea of budgeting by writing down their short- and long-term savings goals. Achieving these goals will help your child develop ever-important money management skills. To avoid discouragement, start with a lower-priced goal that will be easier to achieve in a shorter amount of time. You can then work up to higher-priced items once your child becomes more comfortable.
  5. Save with a piggy bank. A piggy bank is a great and easy way to conceptualize saving. Be sure to explain the goal to your child, to fill up the piggy bank with coins and dollars, until it’s filled to the top. Demonstrate that the piggy bank will help him or her save for the future.
  6. Open a joint savings account. As space runs out in your child’s piggy bank, give him or her a place to stash their cash to continue growing their savings. A joint savings account is a great option to help with their continued progress toward their savings goal. Each month, review statements with your child, so they can visualize their savings over time.
  7. Include your child in some financial decisions. Whether the decision is big or small, have your child tag along as you make your purchases; it’s a great way to show day-to-day scenarios they may come across in the future.

    • Small decision scenario: At the grocery store, explain why you buy generic items and that brand recognition doesn’t always equate to better quality; although it may be a small difference, the savings can really add up.
    • Big decision scenario: When purchasing an item that takes a bit more consideration and research, such as a new tv or mattress, encourage your child to ask questions, while you explain your reasoning for your purchasing decision. Instances such as these can better prepare them when it comes time to make these big decisions on their own.
  1. Talk about tough concepts. Don’t shy away from complicated topics such as: credit, debt, or interest rates. Explain any personal experiences with debt to make the subject more tangible with the understanding that not all debt is “bad.” In the form of a mortgage or college loan, they can benefit from the investment and build a positive credit history needed for adaptive credit in order to obtain such important investments.
  2. Keep the conversation going. Believe it or not, 53% of kids said that they wished their parents taught them more about money according to the 2019 T. Rowe Price survey.3 Whether the conversation is on a weekly or monthly basis, integrate money chats into your everyday conversations. The more often the conversations take place, the more likely your child will achieve good financial well-being.
  3. Lead by example. Kids are quick to pick up on the habits and behavior of their parents, so be mindful of your purchasing actions and behavior, especially when your child is present. Are you a mindful spender or do you blow through your money? If you want your child to become a frugal saver, becoming one yourself can help. By getting your emergency fund back on track, increasing your retirement savings contributions with an IRA, or even opting into a money management tool can help encourage spending and savings strategies.

As parents, we can empower the next generation by teaching our kids the importance of saving at a young age. Although talking to your child about money may seem strange, it isn’t; it is essential to help shape strong financial habits for their future.




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1 Reuters - Red Flags emerge as Americans’ debt load hits another record

2 Consumer Financial Protection Bureau – Money as You Grow for Young Children

3 T. Rowe Price 2019 Parents, Kids, and Money Survey – Kid Attitudes and Behaviors, slide 73