Most kids think of money as something you spend. They see you buy things and, even if they don’t actually see the money, they know you are using money. But are they aware that you also save money?
The importance of saving money is probably the best place to start with a child. Have conversations about how you save, how it feels good to have money set aside in case you need it, and how you don’t spend all your money all the time.
Explaining wants versus needs can also be helpful in teaching kids about money. You can talk about how you spend money on things the family needs, like food, clothes, and healthcare. When all the needs are taken care of, you do one of two things with what money is left: save it or spend it on the wants, like tickets to an event, a new game, or an interesting book.
Learning to save is an essential money habit, as it teaches discipline, goal-setting, and delayed gratification. Saving can give a child a sense of independence, enabling them to make (largely) their own decisions about what they want to do with the money they have saved. You can help your kids get in the habit of a saving by giving them a bank or jar where they can deposit coins or cash. Consider a clear jar so they can watch their money grow. You can encourage your child to save more by agreeing to match the amount they save dollar for dollar or by a certain percentage.
Another approach is to combine savings and charitable giving. You can match your child’s savings and put that money into a separate giving jar. Discuss causes that might interest them, such as a local pet rescue, nature center, or food pantry. Together, you can visit charitynavigator.org to find highly rated organizations.
For these lessons to really sink in, you should lead by example. Make sure they see you making smart saving and spending choices. Additionally, try not to complain about having spent too much on things, and let them know the charities you are donating money to.
Here are some resources to help you get a young child thinking about saving and spending responsibly:
- Peter Saves for a Rainy Day by Rosanna Guardavaccaro, a financial services representative at Barnum Financial Group, introduces basic financial planning and savings concepts in a colorful and entertaining way. It also includes a simple way to budget using a pie chart. This first book in the series encourages children to follow along and learn the importance of “saving for a rainy day.”
- Money Savvy Piggy Bank is a classic piggy bank with a modern twist. Available in several fun colors, the bank features four individual chambers labeled save, spend, donate, and invest. Children can see their progress through the piggy bank’s translucent body with money emptying out separately through its four feet.
- If you prefer to go digital, the free PiggyBot app for iOS is a virtual piggy bank for children between the ages of 4 and 8. For kids who are used to a physical piggy bank, PiggyBot has a familiar look and feel. However, it deals with virtual money rather than physical coins and bills. To use PiggyBot, kids create a virtual account, complete with their own PIN. Each week on allowance day, parents or guardians can add virtual funds to their kids’ accounts, eliminating the need for parents to keep cash on hand and allowing children to watch as their account balances grow.
- The U.S. Mint’s kids’ site H.I.P Pocket Change aims to teach children about U.S. currency and its history. In its pages, youngsters can find a wealth of kid-friendly information about how coins are made, current U.S. coins, coin collecting as a hobby, and the mint itself. The game “Counting with Coins” can help children the most with real-world money skills. This game teaches preschoolers and young school-age children how to identify different coins and their values, add up prices, and perform basic math tasks. As kids complete challenges, they earn badges and collect supplies for cartoon characters going on a camping trip.
- The iOS app Savings Spree, sponsored by Money Savvy Generation, is a game to teach kids to save money for a specific goal. It’s presented as a game show hosted by a talking cartoon pig, with players taking on the role of contestants. The game is designed for ages 7 and up, but younger kids can also play with help from a parent or older sibling.
With these money tools and resources, you can help your child heed the advice of one of the wealthiest people in the world who was inspired to save and invest by a book he borrowed from an Omaha public library when he was 7 – One Thousand Ways to Make $1000. According to Warren Buffet, “Do not save what is left after spending, but spend what is left after savings.”