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Feb 4, 2012

Helping Your Child Save Money

Teaching children to save money isn't going to happen overnight. It happens over years. They usually want to immediately spend the money they receive. This is a habit formed from past experiences.
To encourage the saving concept, you can show children the benefits of saving by trying several different ways. Once they understand the concept, you can back off a little.
But how do you get them started? Here are a few tips.
Match their savings
Tell your child that for every dollar saved, you will put in a matching contribution. When they are little, you might be able to match 100%. As they get older, 25% or 50% might be more reasonable. Just be sure to discuss it with them at each stage so that there are no misunderstandings.
Open a savings account
Encourage a deposit of a part of the earnings into a savings account and track the interest earned on that account. Banks and credit unions have special features just for kids. Shop around for the best value for your situation.
Encourage the idea of setting goals
Discuss items they would like to have and then prioritize that list by how badly they want each item. Make a drawing of an empty thermometer for as many items as they would like to track. Depending on their age, this could be as little as one to as many as 5. As they save their money, color in the thermometer. They'll be able to track their progress visually. It also helps them see how much value is in each dollar.
Give rewards
Young children may not understand that $10 tomorrow is better than $5 today. Consider rewarding children with things special to them for saving their money: stickers, toys, and special outings can be helpful.
Make a list of future wishes
Encourage children to identify fun things to spend their money on. For older children, prioritizing the list can be a helpful challenge.
Encourage them to find a picture of the item they want
Hang a picture of a wanted item off their wish list on the wall. If your child is saving for a special purchase, hang up a picture to remind them of what they are working towards.
Show by example
Keep a piggy bank at home with a label for what you would like. If possible, make deposits in the bank when you are with your children and explain what you are saving for. Your children will mimic your behavior when you lead by example.
Support their expenditure choices
Occasionally, children make poor choices that might seem like a waste of money. You can help them enjoy the process by supporting their selections and discussing alternatives for next time. You can also surprise them at random times by buying something they'd like.
Discuss appropriate spending
Some children will get so focused on saving their money and won't spend any money along the way.