They say children are the future. If that’s true, my wife and I may have a hard road ahead. Our son is still learning the concept of sharing and he’s developed a habit of throwing a handful of coins in the air to see them rain down.
Ok, he’s only five years old so we have some time to avoid a Soylent Green nightmare but we’ve yet to really start teaching him the concept of money.
That’s why I reached out to 36 personal finance bloggers for their advice on teaching kids money-saving tips. The result was an excellent collection of ideas and rules for raising your kids to be financial superstars from how to budget and save to understanding the real value of a dollar.
What to Remember when Teaching Kids about Money
Teaching kids money saving tips gives them a head start on life, and in all truth will only benefit them in the long run. Teaching kids money saving tips is something that can be done from a young age without any problems attached to it because they are not going to fully understand what you're teaching them until they are more grown up.
The most important thing about teaching kids money saving tips is that they are introduced to it almost as soon as they have started to earn their own pocket money. Giving your child small amounts of their weekly pocket-money for ‘their' bank account is one of the best ways to get them into the habit of putting some money away instead of spending it all at once. It also has a ”I worked hard for it, so I'm not giving you my money” attitude with them. It teaches them to value things they own and the need to provide for themselves, as well as giving them a sense of financial security.
A few ideas came up consistently from the experts and it might help to remember these when teaching your kids about money.
- Start early. It always amazes me how much our son understands, even if he can’t express it in words. Kids understand concepts like scarcity and value at an early age. The sooner you can show them how money relates to these ideas, the more good financial habits will seem like second-nature.
- Set the example. I call our son ‘the little monkey’ because he repeats nearly everything he sees. More than just a curious mimicking, your kids look up to you and will adopt your habits. We grow up to be our parents, for better or worse.
- Help them with goals. Kids can have trouble seeing the long-term payoff from the immediate sacrifice of not spending now. Help them visualize their goal and get excited with them about meeting it.
- Raise the bar gradually. Don’t expect your kids to be financial mavens from day one. Start with small goals that pay off within a day or a week before working on longer-term goals. Start by saving a smaller percentage before building up to bigger savings.
- Make saving and investing fun with some of these personal finance calculators
Keep these four guidelines in mind while reading through the tips for teaching your kids about money. Don’t feel like you have to work on every tip right now or even at all. Pick a handful of ideas that you want to try with your kids and shuffle some ideas in and out over the years to teach them different money saving ideas.
I pulled out my 9 favorite ideas from the list for this video, some amazing tips for teaching your kids the value of a dollar, saving and investing. Check out the video and scroll down for the rest of this list parents won't want to miss!
I'm planning on doing a lot more videos this year, reaching the community with some great ideas on beating debt, saving money and making your money work for you.
Teaching Kids Money Savings Tips through Open & Honest Communication
One of the underlying themes to almost all the suggestions for teaching kids money saving tips was a rule for open and honest communication. Talking with your kids about money and starting the conversation early is a great way to teach your kids about money before they pick up bad habits elsewhere.
Stefanie O’Connell, The Broke and Beautiful Life
I think the biggest thing parents can do to help their children learn about money is keep them in the loop. We have honest dialogue about so many things, why not spending too? Talking about trade offs and compromises in spending choices is much more powerful than simply saying “no”.
Get your kids started early in one of the best decisions they can make with their money – investing rather than spending! Investing in peer lending or starting a real estate investment group will help them grow up thinking about the value of their money today and how much it grows with investment!
Nick Loper, Side Hustle Nation
I call this the 30-Day Test to Curb Consumerism. I didn't make it up but it works really well. The next time your kids want to buy something — new clothes, a new toy, etc — have them sit on the decision for 30 days.
Make a note on your calendar to revisit the purchase after the days. If they still want it then, let them go ahead and buy it. But I think a lot of the time you'll find they're no longer as gung-ho about making that purchase. After all, they presumably lived a perfectly normal and happy existence the last month without it.
Amanda Steinberg, Daily Worth
I'd suggest focusing on teaching skills over instilling ideas. Kids want to experience and engage with things that make sense to them. Find creative ways to leave your children with skills they can repeat and build on without you. Whether it's opening up their first bank account with them or finding creative ways to do math homework, leave them with the confidence they need to see themselves as able.
Amanda's input made me realize something important about all the ideas, something that's possibly even more important than teaching kids about money. Nearly every idea is a great opportunity to connect with your kids and spend some real quality time!
Start investing with your kids and show them the power of starting early! Put Goldilocks back on the shelf and read investing books like, Step-by-Step Dividend Investing, to teach your kids how to put money in their pocket with dividend stocks and other income investments.
Sarah Li Cain, High Fiving Dollars
I think one of the best ways is to help them foster their sense of curiosity, and find out ways in which their skills can be useful. That in itself will carry them through things such as learning personal finance, researching passive income and investing strategies, and even the skills to help them succeed in work.
I aim to do things like show them a bank card for example, and how I use it for purchasing things, or what bills mean, things like that. But let them explore and don't be afraid for them to “fail”. I failed a lot as a kid, and my mom never coddled me, which I think really helped me with many of my money decisions and the skills I've used to earn more money.
It's not just earning money but using it wisely. Investing for retirement is about the furthest thing any young adult thinks about but starting early can be a golden opportunity.
Julia Scott, Bargain Babe
Talk to your kid about money so that it's not a scary topic. Talk about using a credit card, how to pay it off every month, and where money comes from. As a kid, my Mom gave me $1 if I balanced her checkbook. It motivated me to do math and think about keeping a positive bank account balance.
Debt consolidation is a big topic on the blog, how to use p2p loan sites to pay off high-rate debt and how to avoid some of the warning signs in loans.
Julie Starnes Rains, Investing to Thrive
Be ready and able to answer questions when your kids have them. The more you know about banking, credit, student loans, investing, etc. the better resource you can be for them. And the more you push responsibility to them or allow them to claim responsibility, the more questions they'll have.
That is, if you give them a budget or tell them “no” to a request, they seem to quickly develop the skills to manage a budget or find a creative (free or inexpensive!) solution to a problem. They also may be more eager to hear your cost-saving ideas.
My kids (both are nearly grown now) haven't always been ready to learn despite my efforts. But it's been helpful to have answers and guidance for them when they are ready.
Start an investing account with your kids. Let them pick stocks from the things they buy and teach them about long-term goals. Investing just $20 a month can grow to nearly $7,000 in 15 years and sets the stage for meeting their long-term goals.
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Andrew Sather, eInvesting for Beginners
I'd say the biggest thing to teaching kids about money is finding teachable moments. With my child, I plan to give her an allowance but also give her the opportunity to do more chores to earn more money towards a toy she wants. It will teach the value of money and the habit of saving. A few birthday gifts of shares of stock will help guide the investing discussion too and help her feel involved.
Tracie Fobes, Penny Pinchin’ Mom
My best tip is to actually start young! By teaching your kids the principles of give, save, spend when they are young, they will be given the tools they need to make sure they always handle their own finances the right way as they get older.
Teach your kids the risks in overspending and loans. Help them see that not all debt is bad but that you have to manage your credit and not get swamped in payments. Show them how personal loans work and how to consolidate their debt.
Using Personal Experience to Teach Kids about Money and Saving
We learn by doing and our kids are no different. Many of the ideas had kids doing some kind of task or applying themselves to learn about money. This not only teaches kids that money is earned in the real world, it also helps them develop their own skills.
Robert Farrington, The College Investor
It's important for parents to teach their children the value of money. I grew up understanding that nothing was free – I worked doing chores to earn allowance, so I could go buy video games. Didn't have enough money for the game I wanted? Better work more. My parents really instilled that into me and I want to instill that same mindset into my children.
Build a blog with your kids and learn together how to make money online. Starting their blog will teach kids entrepreneurship, writing skills and that hard work pays off in financial freedom! Check out Make Money Blogging for the nine proven strategies bloggers use to make money and get started today.
Pauline Paquin, Reach Financial Independence
My best tip is to involve the kid early on with financial decisions. Small things at first, like should we buy that box of expensive cookies or go for name brand, should we buy water at the park or bring our own bottle. And show them that with the money saved the family can do XYZ together. They should have power over the money they get for their birthday, allowances and money earned for small jobs, to decide deliberately if they want to spend it, save it for a big item, donate it etc. The more power they have, the better they will manage their money in the future.
Paula Pant, Afford Anything
Teach your child the connection between work and money. Don't give them an allowance just for existing.
Kirk Chisholm, Innovative Advisory Group
Interest rates are at historic lows in the US, so there is little incentive for children to save money. Your child might be lucky to get 1% a year. This is not exciting for children or adults. One way to incentivize them to start good habits and save their money is to pay them “extra” interest.
Try to come up with an interest rate that is both rewarding and incentive enough for them to keep their money in the bank. If you can reward them enough they will love saving and you can help them set good habit for when they grow up.
Andrew, Listen Money Matters
Give your kids, even young kids, an allowance. But also give them the opportunity to earn more through small tasks or chores. It teaches a child that their own hard work will earn them more money.
Deacon Hayes, Well Kept Wallet
If you want your kid to be good when it comes to personal finance, they need to know how to make money so that they are not reliant on someone else to pay their bills. Have them start a small business, whether it is a lemonade stand or selling crafts on Etsy, and teach them early on what it takes to make a profit. This skill will come in handy to achieve any financial goal in life.
Lena Presley Gott, What Mommy Does
My kids are still little (8, 6, and 4), but I think it's important to start them young when it comes to managing finances. I'm a big fan of teaching them practical application of the things they need to know when they leave your home.
Things that will help them stretch a dollar as they build their lives separate from yours without access to your money. Like how to figure out which item is a better buy in the grocery store, how to get gently used items for a good price or even how to meal plan so they aren't constantly eating at restaurants. I think teaching them principles of saving should be coupled with a strong work ethic.
I want my kids to be successful, but also able to hang onto their money. It's a big job we have teaching them all the life skills they will need before they leave home – you can never teach them too much.
Show your kids how fast their savings will grow with this savings account calculator.
Robert Berger, DoughRoller.net
Let your kids suffer a bit. We can be too quick to ease the financial pain our kids sometimes experience. If they don't have the money to go out on Friday night because they spent it on something else or don't have a job, then they shouldn't go out on Friday night. The best thing my parents did for me as a teenager was make me work if I wanted to have spending money.
Holly Hanna, The Work at Home Woman
I've found the best way for kids to learn about money is through hands on experience. When kids have to do little tasks or chores to earn money, they learn the value of hard work. When they want something, let them use their money to buy it.
This helps teach them goal setting, saving, and the value of money. For instance, when my daughter wants something, I'll tell her that yes, she can have it, but she has to use her own money to buy it. Nine times out of ten, she'll pass on the purchase, because she knows how long it took to earn it. If you don't allow your kids to “manage” their money on their own, they'll never learn the basics.
Teaching Kids Money Savings Tips by Example
Another underlying theme to the suggestions was that parents must lead by example when teaching kids money saving tips. A “do as I say, not as I do” standard will only teach bad money habits and a sense of guilt about not being in financial control. I'm glad I've made a few money blunders so I can teach my son from my mistakes.
Matt Becker, Mom and Dad Money
The best thing you can do is learn how to take control of your own financial situation and act as a responsible role model. Kids learn a lot by watching, and you can also talk to them about some of the decisions you're making as you make them. For example, instead of just saying “no” when they ask for a toy, you can say something like “we aren't buying this toy right now because we're saving for the vacation we're taking this summer.” That kind of role modeling and dialogue will go a long way.
Kurt Fischer, My Money Counselor
For me, the #1 tip–with no close second–is for parents to set an excellent example! What could be better guidance for a kid than to witness, and participate in, the family's discussions about a family budget, spending priorities, long-term goals, saving for that trip to Disney, etc. Driving home the simple idea that if you want A, then you need to forego B, C, and D that are less important to you would be huge!
As kids get older, walking them through a credit card statement (with particular emphasis on the APR and how that translates to $$$ if the balance isn't repaid in full), a credit report, and even a mortgage document would all be really valuable I think. Schools don't take on personal finance education, so parents must!
If you want to scare your kids off credit cards, use this credit card interest calculator to show them how much you lose to interest every month!
Jason Cabler, Celebrating FinancialFreedom
My #1 tip for teaching your kids about money is to teach them how to make a plan for their money. In the adult world this is called a budget. For kids, it's as simple as writing down how much you want to set aside for 3 basic categories, which are Spending, Saving, and Giving.
As they get older you can teach them a little more about budgeting using more categories than those 3 basic ones. However, if they don't see the parents doing it for their own money first, the lesson of budgeting may not stick. So teach your children well and lead by example!
Todd Tresidder, Financial Mentor
Lead by example. If you want to teach your kid to buy value then buy value yourself, and help your child make better value choices in his own purchases, particularly when it means saying “no” to some of his requests. If you want to teach him to delay gratification, then walk the talk and show him the choices you're making and why. Your children will do what you do, not what you say.
Brian Fourman, Luke1428
As a parent, I've always lived believing the adage “More is caught than taught.” In other words, my kids will be more likely to do what I do than do what I say. Another way to say it is that actions speak louder than words. So if they see me giving to others, consistently saving and controlling my spending, there is a greater likelihood they'll follow in my steps.
Kraig Mathias, Create My Independence
My #1 tip to teach kids is to only buy what you have the money for to pay for. This is best taught by example, which is how my dad taught it to me. He saved money and paid cash for all our cars, which were used by the way. No borrowing for furniture, TVs, snowmobiles, etc. Money comes first. Things come second.
Luke Landes, LukeLandes.com
The best way to make your bid a financial superstar is to be one yourself — or at least, strive to be. Kids learn by watching their parents. It's the single most important method of education, especially at the ages where children are most impressionable. They pick up on subtle clues about managing money from parents more than explicit lessons or lectures. Create a culture in your home for financial responsibility, and you have the opportunity to have the biggest effect on your children's future financial behavior and success.
Teaching Kids Money Savings Tips about the Power of Saving
Kids have an amazing financial opportunity because of the time ahead of them and the power of starting early. Your one-year old doesn’t need to start working amortization schedules out on her calculator but teaching your young ones about how savings grow through compounding is a great way to get them interested in meeting financial goals.
Jeffrey Strain, Saving Advice
Turn your bills over to your kids and pay them the savings they can generate from lowering them. Instead of you constantly trying to get them to do stuff, the roles will be reversed and your kids will be hounding you to turn off the lights in each room.
David Weliver, Money Under 30
I have to believe that if you can teach your kids (early on) to save for something big he/she wants, and then repeat the process a few more times as your child grows into a teenager and young adult, that will help him or her become a saver in adulthood.
Linsey Knerl, 1099 Mom
We put our kids on a “responsibility curve” for big purchases, like summer camp. Since they earn allowance and save money from birthdays, we only pay for their first year of camp in full for them. After that, they have to pay an increasing percentage of their camp expenses until they are in high school, where they pay the full amount. Our camps aren't too expensive ($150 for a week), but it teaches them that they will be expected to be increasingly in charge of their purchases.
We do this with all the extras. My HS Senior, for example, now pays for anything that isn't basic food, health, living expense, etc. She will now be able to handle those thing when she's away at college, because she's had practice!
Laurie Blank, The Frugal Farmer
My #1 tip to make your kid a financial superstar is to teach them the power of compound interest, both in regards to savings and in regards to debt.
Also, involve your child in the family finances. They don't need to know everything, but letting them watch as you budget and make savings and spending decisions is huge in preparing them for their own financial journey.
John Schmoll Jr, Frugal Rules
The most important thing, in my opinion, to teach your child with regards to finances is the value of saving money and actually living that out. That can be as simple as helping them save a certain percentage of birthday/holiday money they receive to jobs they have. This is meant to help them understand the need and importance of paying themselves first with the end goal of helping them see the value of making their money work for them as opposed to being enslaved to it.
Teaching Kids Money Savings Tips about the Real World of Money
Even the best financial plans don’t always work out how we would hope and there are harsh realities to personal finance. Teaching kids about money is also about helping them understand and deal with the real world of money.
Lance Cothern, Money Manifesto
My tip to make your kid a financial superstar is to charge them the parent tax on all of their income. Withhold a certain percentage of all of their earnings to prepare them for the real world. Of course, you shouldn't spend this money. Instead, save or invest it for when your turns 18 and apply it to their college costs or other career development opportunities. This will help prepare them for the sad reality that you don't get to keep every penny of your paycheck.
Nicole Rosen, Finance Diva
The importance of credit and understanding the value of something. Not necessarily its cost, but its value. If you buy a $500 car and have to do $500 worth of repairs every month for 6 months versus buying a $2,000 car. Which is the better value?
William Dwight, Famzoo
The 4×6 index card with the 5 things I want to teach my kids about money is one of my most popular posts. It follows the K.I.S.S. idea of keeping it simple and short to keep to the basics.
Paul, The Frugal Toad
Children need to understand the value of money and one of the most effective ways to teach this is through an allowance. One method is to reward the child each week for completion of a list of chores. Try to avoid assigning a dollar amount for each chore and instead award the allowance based upon completion. As an incentive, you can offer to match the allowance if your child complete all chores in a timely manner.
By providing an incentive your child will learn that extra effort is rewarded and their lack of effort has a real cost. Take your children shopping with you and explain the cost of items in terms of how many weeks of their allowance it would take to buy the item. Over time they will begin to equate the cost of material items with the amount of personal effort required to purchase that item. Ultimately, you will want to setup two accounts, a savings account in which your child can deposit a minimum of 50% of their allowance and gifts into, and a spending account from which they can use to purchase items.
Jeff Reeves, InvestorPlace.com
My biggest piece of advice would be, in a nutshell, to give kids as much money as possible less frequently rather than doling out money a dollar at a time and acting as their gatekeeper. There is simply no way for a child to understand a budget or responsibility if you’re making exact change and approving or vetoing every decision they make.
For a 10-year-old, maybe instead of giving them lunch money for school every single day, give them $80 for the entire month and trust them to budget it properly… and warn them if they run out, they will be eating a PBJ and water every day they can’t cover the tab.
I’d also make a “contract” of monthly chores and schedule a payday of $100 or $200 on the first of the month. Paying them $5 here and there for each task is nice, but that’s not really how the working world works.
Heck, I even advocate giving older kids an actual credit card — with a low limit of like $500 or $1,000 of course. Trust them to manage that card, and be thankful that they did it under your roof instead of at 24 years old with nobody to help them get back on track.
The idea is to show your kids what REAL money is and the necessity of budgeting and deferring expenses. Giving them a few coins for their piggybank or exactly $20 for the $14 movie ticket and $6 in popcorn doesn’t really teach anything.
Briana Carter, BargainBriana.com
Help your child set up their own bank account and have them come with you to make deposits (birthday money, loose change, from doing odd jobs.) As they get older, they can make withdrawals when parent approved!
Alan Moore, XY Planning Network
Talk to your kids about how much money you make, and how much money you're worth. Kids grow up not having any clue how much money their parents make, and therefore don't have any relevant comparison points for when they start work. Let's assume their first job offer comes with a $40,000 salary, which sounds like a lot of money. But if they know their parents made $100,000, it's going to help them understand the lifestyle that they can afford, and just how different it is from what they grew up with.
Kids tend to adopt their parents lifestyle, even though they can't afford it, because it's what they grew up with. Telling your kids how much money you make is a great way to teach them what money is really worth, and can set them up for financial success.
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I want to thank all our experts for their ideas on teaching kids money saving tips. These top tips will be put to good use in raising our son and I hope you’ve picked out a few that will help you teach your own children. If you found the article helpful, please use the social media buttons on the left to share it with your friends. Please use the comment box to share your own suggestion for teaching kids money saving tips.
Read the Entire Money Saving Tips for Kids Series
- 5 Fun Games to Teach Your Kids about Money
- 5 Rules to Teach Your Kids about Money
- 5 Reasons Not to Give Your Kids an Allowance
- 3 Tools to Teach Your Kids Practical Money Skills
- How Tough Love Can Teach Your Kids to Save
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.