Learning how to save money is a skill a person can learn at just about any age, but the younger the lessons begin, the better children will be at it when it’s time to leave the nest.
Many parents find that talking to children about money is awkward, but it’s just as important to talk to your kids about money as it is to talk to them about the facts of life or drugs.
If you look back at your younger years and cringe at how you handled money, recognize the opportunity you have to help your children do better.
Here are 12 age-appropriate ways to teach children how to save money.
Set a Good Example for Children Whatever Their Ages
Managing money successfully is about making good decisions.
Obviously, your preschooler won’t understand your bank statement, but you can use everyday situations to talk to kids about money on their level.
Older kids are very aware of your attitude toward money, and they will notice if you talk about how to save money, yet constantly make impulse purchases, so make sure your actions match your words.
Provide Your Young Child with a Piggy Bank
Up through the early elementary years, this can be a good teaching tool.
Preschoolers like the sound of the coins dropping in, and kids in early elementary grades understand that as Piggy gets heavier, they’re saving money.
Savings goals should be very simple: When Piggy is full, you’ll help your son count his money and let him spend some of it.
Teach Young Children Money is Used to Buy Things
Early elementary aged children can learn to identify different bills and coins.
Once they reach the age of seven or eight, they can understand simple equivalences, like four quarters is equal to one dollar.
Playing “store” or “restaurant” helps reinforce this knowledge.
Explain that Sometimes You Have to Save for What You Want
Even kids under eight years old can understand that they don’t have enough to buy the action figure they want but they can save their allowance until they do.
Depending on a child’s maturity, she can start receiving an allowance around ages six to eight.
As Children Get Older, Teach Comparison Shopping
When your nine-year-old is at the supermarket with you, you can point out when you discover something on your list that’s on sale, and that comparing prices is important in learning how to save money.
Give Your Tween Increased Responsibility
Requiring your children of around nine years old and up to pay for their own extras, like games and non-essential clothing, helps increase their incentive to save.
Teach Tweens to Allocate Money for Spending, Saving, and Giving
Children in this age group can understand the concept of using some of their money to help others.
When they have a little bit of their “helping” money saved, you can go with them to donate to a charity drive, church, or animal shelter.
Introduce the Bank Account
Many credit unions offer account programs for tweens with special incentives, like sign-up bonuses and small prizes.
Tweens can understand that banks pay them a little bit for every dollar they deposit, and that they can use that money later.
They can also learn to set aside part of their allowance to put into the bank.
Explain the Risks of Online Shopping to Adolescents
From age 11 or 12, kids should know that entering credit card numbers and personal information online is dangerous, because people can steal that information and use money that doesn’t belong to them.
Make a strict rule about online purchases: Who they have to ask, and why Mom or Dad has to be there when the purchase is made.
Teach Teens the Basics of Credit Cards
They’ve probably seen you use credit cards and know they’re convenient, but they may not understand the costs associated with credit cards.
Explain the difference between credit and debit cards and how people can use credit cards responsibly.
Teens should understand that using a credit card is like taking out a loan.
Give Your High School Student More Responsibility
Give your high schooler more autonomy over spending. If you provide a certain amount of gas money each week, emphasize that if he uses it all, he’s walking or biking.
Some high schoolers can manage a monthly budget, and this can be terrific practice for their college years.
Making mistakes now is much less painful than when they’re away from home for the first time.
Teach Your Motivated High Schooler Basic Investment
Some high school students are interested in investments, and you can help them track stocks or even buy a small number of shares.
If your teen chooses to set aside money to invest, help her with online resources for new investors. Be sure she understands the risks that go along with investment.
Teaching your children how to save money isn’t a one-time talk. It starts when they’re young and continues as they grow and learn.
Learning how to save money requires practice, and it often includes mistakes that turn into lessons. With age-appropriate instruction, your children will be less naïve and savvier once they reach adulthood.
Mary Hiers is a personal finance writer who helps people earn more and spend less.