10 Tips to Teach Kids Money Saving Habits

Heather Quackenboss, Human Development and Relationships Educator

Wants vs. Needs
- While needs are the basic food, shelter, clothing and wants are the extras, this conversation can lead into budgeting.
- Budgeting is a spending plan that includes income and expenses that can also help determine if you are satisfied where your money is being spent.

Earn their own money
- When children earn their own money, they also learn how to use it as well as the value of hard work.
  - Allowance in exchange for age appropriate chores is one way to help children learn how to earn, save, and spend money.

Set savings goals
- Children sometimes seem to have quite a few wants, and like instant gratification. Setting a savings goal for an item that they want is a great start on a path to healthy savings habits.
- Encourage children to break down a goal into manageable bites – take the total cost of the item they want, look at how much money they earn, and figure out what or how they can save and how long it will take to reach their goal.

Give them a dedicated place to save
- Younger children often appreciate a piggy bank so they can see their coins and dollars add up.
- Older children can open a savings account (with your assistance).

Encourage them to track their spending
- Knowing where our money goes each month gives a big picture of how we are truly spending. Budgets can fail because our expenses change week to week or month to month.
- Tracking spending can also help determine where to cut back if there is something we are saving for.

Offer savings incentives
- For adults, sometimes there are incentives, like matching contributions which help us want to save. We can offer the same for children.
  - For instance, if they are saving for a larger item, we can offer to match the funds they save or offer a reward when they hit certain milestones in their savings.

Leave room for mistakes
- Part of kids being in control of their own money is letting them learn from their errors. It is tempting to step in and steer our kids away from mistakes, but it can be better to use that mistake as a teachable moment.
  - Making a money mistake as a child or teen is a lesson that they are likely going to remember and will be less costly than making that same mistake on a larger level as an adult.
  - Children also then have support from you to learn how fix their money mistakes and bounce back from them.

Act as their creditor
- One of the basic saving’s tenets is to not live beyond our means. For large items, adults take out loans (mortgage, car, etc.).
- If your child wants to purchase something and time is a factor, you can act as their loan officer and “lend” the money to them for the purchase. They, in turn need to make payments for that loan with interest.
- The lesson is to teach that saving delays gratification, but will not cost more.

Keep lines of communication open
- Life has all kinds of topics that we talk to our children about, and none of them are a “one and done” conversation. Talking about money, finances, savings, investments, etc. is something that can be done with conversations while you are working on finances or even at the grocery store.
- Being open about finances, in an age appropriate manner, can help our kids learn about it and know that they have someone they can trust to ask questions of.

Set a savings example
- Saving money can be hard, and sometimes, we need some help in figuring out our own finances so we can save money ourselves before, or while, we teach our kids about saving.
- Local resources to get help with finances include:

Financial/Debt Counseling Programs	Phone
Consumer Credit Counseling Services (CCCS)	608-784-8380
Catholic Charities	608-782-0710
Consumer Financial Protection Bureau	(855) 411-2372

- A fun way to save as a family is to pick an item that you all want to save for together. This helps everyone learn how to contribute and helps build excitement for the item you choose.

For more information:

Extension La Crosse County