5 Ways to Teach Your Kids Good Saving Habits

Teaching your kids financial literacy is one of the best ways to set them up for success later in life. Building a foundation of good saving habits can prepare children for life’s financial ebbs and flows.

There are many ways to teach children to be savvy savers. Here are just a few to get you started.

Set a Good Example

As with so many things, one of the best ways to teach your children how to save money is to practice good savings habits yourself. Consider ways you and your children can save money together—matching savings jars, perhaps? Performing the act of saving together can help establish a routine for both of you.

It’s also an excellent time to examine some of your bad spending habits and take steps to fix them. That in and of itself is a valuable lesson for your children to learn: that even if you make a financial error, there are ways to correct it.

Normalize Talking About Money

Our society has strange hangups about money, and older generations still struggle to discuss it. How many of us learned never to talk about money from our parents because it sparked feelings of shame or was considered “uncouth”? How many of us, instead, listened to our guardians fight about it behind closed doors?

As they say, the buck has to stop with you. While you may have learned certain beliefs about money, you know better now and can teach your children something different. Having relaxed conversations about the basics of personal finance can empower your children to ask questions or reach out for help if needed.

Try Role-Playing Purchases

When it comes to teaching your kids about money, nothing beats real-life practice. Depending on your child’s age, you can set up different situations that teach them the basics of spending and saving:

Agree on a savings goal (say, a day at the amusement park or a new video game) and use visual aids to help them “see” their savings grow. Set up a special jar alongside a chart with stickers or magnets to mark their progress.
Engage in “sales” with your kids, where they “pay” you for items they want. For example, you could design a “new toy” bin and price each item, then allow your children to “buy” those items from you.
If your child is older, you may have them practice buying things in the real world, like at the grocery store or a restaurant. Give gentle guidance as they navigate doing math, and offer positive reinforcement each step of the way.

Teach “Wants” and “Needs”

“Wants” and “needs” can be tricky for children, especially when their parents often provide the most pressing needs—food, shelter, and essential clothing. But there are ways to help your children learn to prioritize their spending.

Let’s say your child is passionate about soccer and needs a new set of cleats. That could be categorized as a “need” since they can’t play soccer without them. A new bike might be a “need” if your child uses it to ride to school or a job. On the other hand, the latest Air Jordans are not a need. They’re a “want.” Help your child make a choice: is it worth having the Air Jordans but missing a season of soccer while they wait to save back up for cleats?

Starting these lessons now can help your kids when they start paying for things on their own, like their own means of transportation, health insurance, and rent.

Open a Youth Savings Account

At a certain point, it’s time for your children to graduate from a piggy bank to an actual savings account. It’s an exciting day and another great learning opportunity. Take the time to teach your kids about credit unions versus banks and choosing the correct account for their needs. Once their account is open, show them how to set up balance notifications through the mobile banking app so they can monitor their account balance. At Trailhead, you can start a personal savings account with a deposit as low as $5. We also offer an Easy Saver Certificate for our savers under the age of 20—this 1-year certificate requires only a $10 minimum opening deposit and allows additional deposits all year long.