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10 Tips for Teaching Your Child to Save Money

1. Discuss Wants vs. Needs

The first step in teaching kids the value of saving is to help them distinguish between wants and needs. Explain that needs include the basics, such as food, shelter, basic clothing, healthcare, and education. Wants are all the extras—from movie tickets and candy to designer sneakers, a bicycle, or the latest smartphone. You can even quiz them 

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1. Discuss Wants vs. Needs

on items in your home to drive home the concept. For example, point out items in their bedroom or the kitchen and ask them whether the object is a need or a want. This allows you to explain the idea that you have to prioritize what you spend money on, leaving some money for future necessities.

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2. Let Them Earn Their Own Money

Two-thirds of parents said they paid their children an allowance in 2019, according to a survey by the American Institute of Certified Public Accountants (AICPA), with kids earning $30 per week on average, based on five hours of chores. If you want your children to become savers, allowing them to earn and save money provides them

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2. Let Them Earn Their Own Money

with the opportunity to learn how to use it. When you offer allowances in exchange for chores, they’re also learning the value of their hard work.

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3. Set Savings Goals

To a kid, being told to save—without explaining why—may seem pointless. Helping children define a savings goal can be a better way to get them motivated. If they know what it is they want to save for, help them break down their goals into manageable bites. If they want to buy a $50 video game, for example, and they get a $10 allowance 

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3. Set Savings Goals

each week, help them figure out how long it will take to reach that goal, based on their savings rate.

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4. Provide a Place to Save

When your children have a savings goal in mind, they’ll need a place to stash their cash.  For younger kids, this may be a piggy bank, but if they’re a little older, you may want to set up their own savings account at a bank or even get a kid-friendly debit card. Cards by the likes of FamZoo,3 gohenry,4 and 

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4. Provide a Place to Save

Greenlight notify you when they make purchases and allow them to create their own savings goals.

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5. Have Them Track Spending

Part of being a better saver means knowing where your money is going. Tracking expenditures is a little easier with a bank or debt card app, but you can also do it the old-fashioned way. If your children get an allowance, having them write down their purchases each day and add them up at the end of the week can be an eye-opening 

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5. Have Them Track Spending

experience. 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.

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6. Offer Savings Incentives

One of the reasons people save in their employer’s retirement plan is the company’s matching contribution. After all, who doesn’t like free money? If you’re having trouble motivating your kids to save, you can use that same principle to ramp up their efforts. If your child has set a big savings goal—for example, a $400 tablet—you could 

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6. Offer Savings Incentives

offer to match a percentage of what they have saved. As an alternative, you could offer a reward when your kid reaches a savings milestone, such as a $50 bonus for hitting the halfway mark.

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7. Leave Room for Mistakes

Part of putting kids in control of their own money is letting them learn from their errors. It’s tempting to step in and steer kids away from a potentially costly mistake, but it may be better to use that mistake as a teachable moment.  That way, they’ll know in the future what not to do with their cash.

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8. Act as Their Creditor

One of the basic tenets of saving is to not live beyond your means. If your child has something they want to buy and feels impatient about saving for it, becoming your kid’s creditor can help to teach a valuable lesson about saving. Say your child wants to purchase something that costs $100. You could “lend” the money and 

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8. Act as Their Creditor

require payment from the allowance that you provide, with interest. The lesson you want to teach is that saving may mean delaying gratification longer, but the item you want to buy will end up costing less if you wait.

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9. Talk About Money

In a 2021 T. Rowe Price survey, 41% of parents said they don’t like to talk with their children about money, with many expressing embarrassment about bringing up the topic. However, if you want kids to learn about saving, you have to nurture an ongoing discussion. Whether you schedule a regular weekly check-in to talk about money or make 

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9. Talk About Money

money chats part of your daily round, the key is to keep the conversation going.

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10. Set a Good Example

The T. Rowe Price survey found that only 59% of parents had any money saved for retirement, while only 55% had an emergency savings fund.8 If you want your children to become savers, being one yourself can help. Getting your emergency fund in shape, opening a 529 savings account, or simply increasing your 401(k) plan contributions 

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10. Set a Good Example

are all steps that you can take to encourage saving as a family activity. You could also decide to save for something together, such as a big-screen TV, a family vacation, or a pool.

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