How to Teach Your Kids to Save Their Money
It’s never too early to start teaching your kids the importance of saving their money. We’re bombarded with temptations to spend, so saving money needs to be an important part of our kids’ financial education. Learning to save also helps kids to set goals, and it shows how earning interest helps money can grow over time.
To start, help your children divide the money they earn from an allowance or job into three categories:
1. Short-term spending money
2. Savings for a more costly item such as a bike or a computer
3. Longer-term savings for things like college or a car
For younger children, money could be kept at home in separate containers. You could help them count their money and show them how much they need to save to buy something they want.
For teenagers, opening an interest-earning checking or savings account is a great way to introduce them to the financial institutions that protect their money and to compound interest that helps their money grow over time. And with online or mobile banking, they’ll easily learn to monitor their savings and spending.
As a parent, you can set an example by talking to your kids about how you save money for items you purchase. You can also teach them about value by comparing product prices and showing them how they can save by not always buying the most expensive item.
The goal of saving is to teach your children about how to avoid debt and to set aside money for when they will need it most.