Earn, Save and Spend: How Can Kids Save Money?
Most children love money! They love seeing their piggy banks fill up with coins and notes and they love emptying it out, and then spending all the money on toys and junk food. Being able to buy toys and chocolates with their own money is mainly what keeps them motivated to save money in the first place!
But of course, this is not the only the only way to motivate your child to save money because at some point – she is bound to grow out of it and her motivation to save money will vanish. Below are 11 ideas on how to make saving money fun for your little one.
1) Use different jars / a piggy bank with compartments
You may be familiar with the envelope budgeting system for yourself, but it also works on children. On either jars or piggy banks with compartments, have your little one write down what she wants. Be sure to explain to her that some things might require a bit more money, which results in longer saving time.
For example, the short-term saving jay may have a picture of a toy, and the long-term saving plan would be for a trip to Disneyland. Teach your child to have short-term and long-term goals as well as save up for everyday use.
2) Make a savings goal chart
Once you know what your child is saving up for, calculate how long it will take and make a chart for it. You can represent each week with a box and your child can place a sticker in each box once the money for that week has been dropped into the piggy bank.
If her long-term goal is a trip to Disneyland, then get her to place a Mickey Mouse sticker in each box. This way she would be able to see herself getting closer to her goal, which would make her motivated to keep saving.
3) Offer rewards for saving money
Consider rewarding your child for every time she saves money. For instance, if your child has not spent money in quite some time due to saving – give her a small treat. The longer the saving time, the better the treat should be. Try rewarding her with things like extra TV time, a Barbie doll or a trip to the park. Anything that motivates your child to keep going at it.
4) Set a good example
One of the best things you can do is show your child that you save money too! Put money into a jar while your child is watching and tell her that it is your very own saving jar and what you are saving for. This will show your child that saving is a normal thing. Plus, since most children love to be like their parents, seeing you do it will provide them with money lessons and increase their motivation to save.
5) Match your child’s contribution
A “savings match” can be a great way to encourage your child to save extra money and get an early peek at the benefits of a company match for a retirement savings program. While you should have a standard amount your child is required to set aside from her allowance, if she chooses to save more, try to match it.
As your child gets older, a goal chart may be less inspiring, and drawing pictures on an envelope tends to lose some of its charm. However, you can still set an example of saving and you can still match your child’s contributions. Plus, it is always a good idea to have different envelopes, jars, or accounts for different purposes.
6) Open a savings account
When your child is old enough to understand the concept of interest, you can look for savings accounts that earn interest. Help your child open a high yield account online and explain the importance of compound interest.
7) Help your child prioritize
Have your child write down a list of things she wants to spend money on and prioritize that list. Ask your child to think long-term as well; how about a trip to Europe, a nice laptop or a down payment for her own car!
Then, have your child allocate a certain amount of money from her allowance or ‘income’ to each goal. This is the beginning of a financial plan and this kind of thinking will serve your child well in the long run.
8) Let your child make mistakes
Sometimes, lessons in life come from poor decisions, especially when your child is small and the financial loss will not be a great amount.
9) Play games
There are a number of games to teach children the value of money. Monopoly and The Game of Life, for example, can teach money management skills as well as the importance of planning ahead.
10) Talk about money
While you may not want to discuss your salary in front of your child, you may want to let her hear you discuss your financial plan and the arrangements you are making for retirement, for example. This could simply be having a conversation with your spouse while your child is in the room. In this way, your child can understand that saving is a lifelong endeavor.