How to Teach Kids about Saving Money

Table of Contents

You want to teach your kids about saving money? Dave Ramsey, a financial talk show radio host once said:

“Financial peace is not only the acquisition of stuff, but it is learning to live on less than you make, so you can give money back and have money to invest. You can not win until you do this.”

Deep stuff, right? With that being said, it is imperative that all people know how to save money. Furthermore, it is a skill that kids would greatly benefit from. But how exactly do you teach your kids about saving money? Well look no further, your guide to teaching your kids how to save is right here!

What age should you start teaching kids about saving money?

Obviously, there is no exact age when parents teach their children how to save money. Some people may say the timing is right when they can understand the concept of money or when a child gets their first job. It could even be when they are a toddler and start walking around the store asking to buy every toy in the aisle. Nonetheless, this is a valuable skill that all children should learn! So let’s dive into different ways you can teach your child to save their money. 

What methods can parents use to teach their children about saving money?

There are so many different ways parents can teach their children to save money. But first, we would have to look at age groups for exercises and tools that may be suitable for that category. Let’s break it up into three sections to make it a little easier:

  • Toddlers (Age 3 – 8)
  • Young Children (Age 9 – 12)
  • Teenagers (Age 13 – 18)

Toddlers (Ages 3-8)

Oh, the young ones! The age where they simply have to look at you for you to instantly want to buy them anything they want. But no! Instead of giving your child this instant gratification, try these other methods instead:

Start with the conversations

In order for kids to know how to save money, they at least have to have the basic idea of what it is. Explain how individuals start to earn money and why they save! You can also sneak in the topic of need versus want. Are they asking because their friend accidentally ripped their coat at recess? Or, do they want another one of their favorite cartoons? Having a basic knowledge of the meaning of money can help children to understand how and why they should save it.

Buy an old fashioned piggy bank

It is probably safe to say that this is where the majority of us started. Having a safe place for your child to keep money from birthdays or chores is a great way to show how to save money. As an extra tip, using a clear piggy bank or even a jar can help to visibly show the effects of saving. Not only that, but it also gives a little sense of independence and responsibility for your child. This is a great practical first step for a kid.

Start a child savings account

Opening an account for your child is another excellent way to jumpstart the money saving path for your younger kids. In fact, with our kids investing app, you can actually create a savings or custodial account. This way, you can start to teach kids how to save, manage, and invest their money early while simultaneously explaining the concept of why this is important for their future.

Young Children (Ages 9-12)

At this age, it can be fair to say that your child has done a little bit of maturing (even though they still probably raise their eyebrows at the word ‘responsibility’), so now is a good time to start introducing more decisions. 

Earn Money

At this age, kids can do small things such as earning money from grades, chores, or even babysitting. Invstr Jr our investment app for kids is a good tool that can be used for this because it has a feature which allows a parent to have allowance control! There is an endless amount of customizable chores a child can do to earn extra cash. This rewards their hard work and teaches children the concept of earning a living. This way they can have a sense of saving and earning with their own money.

Start Investing

It is never too early to start investing. In fact, the earlier, the better! Starting out with kid-familiar stocks such as Snapchat, Roblox, and Disney can be an engaging and hands-on way to start saving money. The Invstr Jr app our investment app for minors is a great tool that can aid in doing this. It allows for parental controls so that you will always be in the know about what is going on. Along with that, teaching your child the value of long-term investing is practically golden. Learning to invest is a great way to exercise the principle of saving. Even if it is short term, your child can experience the opportunity to gain money. On the flip side, your child can also learn about risk, too. Stock prices can go up or down, so learning to take losses on the chin is part of the deal. This teaches real life lessons.

Opportunity Cost

When kids want to buy something, they usually do not think of the consequences or any other options. This is where opportunity cost comes into play. Yes, if a child has $5 and a toy costs $4 while a bag of candy costs $2, the choice might be a little more obvious. But, what if we went a step further? See, growing up, my mother used to play this ‘game’ in the grocery store. Let’s say a store is having a deal where two bags of chips cost $5 while one costs $2.75. My job was to figure out the difference between the prices. Or maybe, one day she would have a 10% coupon and ask me how much she was saving. (I absolutely hated percentages but you’ll find tricks, like move the decimal over and subtract!). It taught me that there is a possibility in saving even in the little things, such as saving 15 cents in a grocery store.

Teenagers (13-18)

Now, the teenage years. The ages where these decisions will likely have greater consequences. Therefore, the earning, spending, and saving patterns are equally important and it is vital to teach them the skills and knowledge they need to save money.

Control the impulses

This is the age when they start going out on their own, getting a job, perhaps, and overall spending a lot more money. At this age, most kids start making their own money and therefore have the choice of buying things that may not be the most reasonable. This is like a building block from recognizing needs versus wants. Learning how to control impulse buying will definitely help kids save money.

Start Budgeting

A big part of money management is knowing where all of your money goes! As teenangers, many are starting to get their first jobs which means they are gaining more responsibilities too. This could be paying for their own gas, telephone bill, or even clothes. Either way, having a structure of planning where money is spent, saved, and even invested is undoubtedly a skill teenagers can benefit from. You can have them write down all of their monthly expenses and sources of income then from there, plan out what is the best way to go about managing their money. As an added tip, you can even get them to help budget the grocery lists with coupons and deals to save money. 

Save for College

During this time, the talk of college becomes more iminent by the minute. Not only because it is a stepping stone into the real world, but it is arguably one of the biggest purchases a person will make in their lifetime. Granted, it is likely impossible for your child to be able to save thousands of dollars before move-in day, but saving to have disposable income at university is an action that your child will be glad they did. 

However, even if college is not in the plans for your child’s future, there will still come a time when they will have to move out on their own. Saving up for that big decision will inevitably have a worthwhile effect. So, either way teaching your child the importance of saving for after high school is a choice that reaps great rewards. In fact, Invstr Jr allows the user to set a goal for saving money. This can be a useful tool for a money conscious student!

10 Top Tips on teaching your children about saving money

So now that I have broken down different ways to start teaching kids how to save money, here is a list of top tricks and tips that can be pretty universal to all children:

  1. Teach kids about Needs vs Wants

When kids have free will, they (like some adults) will undoubtedly have the desire to want to buy items that may not be the smartest. It is important that kids understand the value of why they are making certain purchases and to make them in moderation.

  1. Allow them opportunities to earn money

How are children going to know how to save money unless they have their own? It is easy to hear and know about a concept but putting it into practice is where the real results come to play. Allowing your kids to have hands-on experience with dealing with money is a great way for them to understand how to save it. 

  1. Set saving goals with your children

Setting goals, whether they are long-term or short, is something many people use in order to have a handle on their money. When kids start earning their own money, saving up to buy something can be a very rewarding experience. It not only shows discipline but that hard work pays off.

  1. Enable them a place to save their money

As mentioned earlier, having a safe, secure place for a child to keep their coins is a great starting point in teaching them how to save money. A piggy bank, savings account, or an Invstr Jr our investment account for minors are all great ideas that you can try out! 

  1. Discuss money with your kids

The foundations of most life lessons start from home. Of course, not all information needs to be shared with your kids, but keeping them informed about how money works in the world and in a household is an easy start into teaching your kids how to save money. It could be as simple as explaining why you are saying no to buying ice cream because you want to save for something else. Or, you want to buy generic cereal because it’s cheaper. This not only shows a real life example of saving, but that you also practice what you preach

  1. Show kids that items cost money

This is where the value of earning your own money comes in. For some parents, this may be easier to do than others, especially if you don’t always cater to every want they go through. 

  1. Teach them about needing to save for college

Everybody is aware of the broke, college student stereotype. I guarantee almost every college student has had an experience of eating instant noodles because it was the cheapest meal they had at the time. Saving up for college or just after graduation and leaving on their own, learning how to save money is an essential step to these big decision choices.

  1. Teach kids about the realities of credit cards

Now, credit card companies do not start targeting people until they turn 18 but it is still important that they know the effects of credit cards beforehand. With many first huge purchases happening like education, cars, and apartments, teens can get carried away with buying something and paying for it later.

  1. Lead by example when it comes to saving money

Actions speak louder than words. Additionally, habits can be picked up by kids and thus continues the cycle. In my opinion, one of the best ways to teach kids how to save money is to show them you are doing it yourself.

  1. Enable them to make their own purchases

These are the types of choices that build lessons into their adulthood. Allow them the freedom to make their own decisions, and learn valuable things such as financial responsibility from them.

Final Thoughts

All in all, teaching your kids how to save money is one of the major life lessons a parent can teach their child. Money is something that is universal and is an everyday necessity that all people physically depend on to survive. If you do not know where to start, Invstr Jr is a great tool that not only teaches but navigates kids and parents through saving, earning, and investing money! This way both you and your kids can be successful in the art of saving money.


Go save that coin!

All investing involves risk and can lead to losses.
Past performance does not guarantee future results.
Invstr Financial LLC (Invstr) is registered as an advisor with the SEC. Securities trading is offered to self-directed investors by Social Invstr LLC, a member of FINRA.

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