Teaching kids to save money is a hugely important task because it can benefit them throughout their lives.
Saving can start with something as simple as a weekly allowance for chores they might be able to do around the house or yard. Explain to your child that this is similar to how you work to earn money so you can buy things.
Talk to them about how savings works. If they’re old enough to understand math, show them how earning $10 a week will add up to $520 in a year. As a reward for saving, you could even offer to pay them a certain amount of interest at the end of each month, based on their current savings.
Next, talk to them about spending – and how that will affect their savings. When they tell you they want something – whether it’s a game, a toy, or a digital device – talk to them about the cost of the product and whether they have saved enough yet. You might even show them how you would look for a lower price to reduce the cost.
Then, take the time to show them how much savings they have left after making the purchase. At the same time, if there are other things they want, discuss how to prioritize what they want with what they can afford. Talk to them about how you need to wait to buy some things until you have more money.
These small first steps can be the beginning of a lifelong habit of saving enough money to meet both their short- and long-term needs.