1. Set savings goals
To a kid, being told to save — without understanding why — may seem pointless.
By talking with your child (or children) and identifying a savings goal, you lay the foundation to keep them motivated. With that goal established, help them break down the path forward into manageable bites.
If they’re going to buy a $60 video game and they, get a $10 allowance each week, help them figure out how long it will take to reach that goal, based on their savings rate, all the while reinforcing how positive it is to work towards what they want.
2. Have them track their spending
Part of being a better saver means knowing where your money is going. If your children get an allowance, have them write down the purchases they make. Adding these up at the end of the week (or month) can be an eye-opening experience and provide valuable learnings.
Encourage them to think about ***how they’re spending*** and ***how much faster they could reach their savings goal*** if they were to change their spending patterns.
Even if they’re spending every dollar, the sooner they gain an awareness of how money is moving in and out, the better their future decisions become.
3. Act as their creditor
For most kids, it will be years before credit is even on their radar. The lesson of not living beyond your means is one they can’t learn early enough.
Is there a big purchase your child wants to make this holiday season? Are they getting impatient, waiting for their savings to grow? Take the opportunity to play creditor and teach the value of saving differently.
For instance, if your child wants to purchase something that costs $150, you could “lend” the money and require payment from their allowance, with interest.
The lesson you want to teach is that saving may mean waiting, but the thing you want to buy won’t end up costing more.
4. Show them that stuff costs money
Money touches everything in our world — from eating, and shopping, to travelling and buying a home. As an adult, we face making financial decisions daily.
Include your child in those decisions. For instance, talking to your kids about how much things cost, quizzing them on a range of pricing and explaining the rationale for purchasing one brand over another will provide context to decisions around money.
Explain why we look for deals or buy items in bulk, anything to round out the thinking in how you’re shopping.
Give your child some money, like $5, in a supermarket and have her make choices about what fruit to buy, within the parameters of what you need, to give them the experience of making choices with money.
5. Teach them the importance of giving
By encouraging your kids to put a portion of every dollar they receive into a giving or charity fund, you start to teach them about sharing, kindness, and how money — whether it’s $1 or $10 — can be used to help others.
We suggest starting with 5–10% of their allowance, enough to make a difference, and initially low enough not to be seen as putting restrictions on personal purchasing goals.
Eventually, they’ll see how giving doesn’t just affect the people they give to, but the giver as well.