The habit of saving money may be a crucial life skill, but it’s not one that always comes easy. In fact, a 2022 survey by LendingClub found that as many as 64% of American adults were living paycheck to paycheck, with little or no money set aside for future needs.
There are good and serious reasons why families may fall into this trap, but the savings habit is an important one to help kids establish when they are young. Teaching them about delayed gratification when it comes to money can help them guard against unnecessary spending and learn to value establishing control of their money. With that in mind, here are 10 steps you can take to get your kids on the saving bandwagon.
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 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.
Let Them Earn Their Own Money
More than three-quarters of parents said they paid their children an allowance in 2022, according to a survey by T. Rowe Price, with kids earning $19.39 per week on average.2 If you want your children to become savers, allowing them to earn and save money provides them 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.
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 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.
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 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.
Talk About Money
In a 2022 T. Rowe Price survey, 37% of parents said they don’t like to talk with their children about money, with many expressing embarrassment about bringing up the topic.3 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 money chats part of your daily round, the key is to keep the conversation going.
