10 ideas to help you teach kids to save money

By glblguy

Piggy Bank

Given our new perspective on money, my wife and I have been looking for opportunities where we can involve our children and begin teaching them about money.

Here are 10 ideas to help you teach kids to save money and about overall money management:

  1. Create a savings account for them. Preferably use one of the new online high-interest bearing banks, such as ING Direct’s Orange Savings.
  2. Start a matched savings program matching their savings dollar for dollar. This is a great way to teach them both about savings and 401k programs.
  3. Encourage them to find opportunities for income by starting a small business pet sitting, home sitting, babysitting, mowing yards, washing cars, etc.
  4. Give them a set allowance, and have them use this to for clothes, school supplies, gifts, charitable donations, savings, items they want and other expenses.
  5. Create a checking account for them with a debit card. This is a great way to teach them how to manage their money with a bank and how to balance the account. Allowing them to use the debit card will help them understand that the money on the card really comes from somewhere.
  6. Make their savings automatic. Have money auto-drawn from their checking account and moved into their savings account.
  7. Take them to the bank and let them make their deposits. This will teach them about how the bank works, the type of forms necessary and how to interact with the bank personnel. Most banks are very kid friendly, plus they can grab a sucker!
  8. Create a brokerage account for them and let them buy individual stocks or mutual funds. There are tons of learning opportunities here such as learning about risk, how to pick stocks, and the benefits of mutual funds over stocks just to list a few.
  9. Involve them in the family finances. We have heard of a number of parents that advocate sharing all aspects but we don’t share our income. We do however discuss our house payment, utility bills, car payments, etc. This gives them and understanding of how much things really cost. We don’t share our income as we don’t want the kids accidentally or intentionally sharing this with others nor do we want them to stress about our money.
  10. Set-up online access to all of their accounts. This allows them to keep track of their money, watch their savings grow and teaches them how to use on-line banking.

I’ve read that some parents give their children credit cards so they can learn and understand how they work. While I can see the potential learning value, this is something I won’t do as I don’t believe in them.

I would enjoy hearing any ideas you may have or your feedback on the items above and in particular your thoughts on kids having credit cards.

9 Responses (including trackbacks) to “10 ideas to help you teach kids to save money”

  1. Cheufong Says:

    Thanks. We need more voices in this world to share the Christian perspective of managing our finances and even our lives.

    Great article. Your 10 ideas to help teach your kids about money are practical. Kind of inspire me to think of practical ideas for my countryÂ’s context. Thanks!

  2. glblguy Says:

    Cheufong, I agree and why that is exactly why I started this blog. Glad you enjoyed the article and glad I inspired you! Thanks for visiting, I really appreciate it.

  3. Jo Says:

    Thanks for this, I’ve done something similar ie steps 1 & 2, as they get older will introduce more responsibility. I think helping them become financially aware at a young age is almost vital. Don’t want the ‘want it now – buy it now’ culture to be something they embrace, I did and got me in this mess.

  4. glblguy Says:

    Jo, thanks for the comment. I agree, starting at a young age is vital.

  5. WJ Says:

    Great information. One thing that we do is connect the allowance with specific chores that must be done daily (clean room, dirty clothes to laundry room, etc.), then we offered ways to make a set amount of money with additional chores. Two dollars can be earned by stacking or carrying firewood into the house. Fifty cents can be earned by helping with the dishes, and so on. It seems to work for us, and the children learn that there is a set amount coming in every week, and if they need or want more, then more work must be done. I really enjoy your website, and may God bless you and yours.

  6. glblguy Says:

    WJ, great suggestion. I like the idea of expected chores and then extras. I think my wife and I will sit down and plan this out. Ours has been a little more ad-hoc lately. Glad you enjoy the site, and may God bless you and your family as well!

  7. SB Says:

    I know that I am coming a little late to the conversation here. But I just set up my own personal ING Savings account (and subaccounts) and I want to get my kids (all 4 of them) set up as well. I believe that their accounts should be set up as “custodial accounts”. Can I do this in ING? Do I set these up as subaccounts under my original account? Is there a way to take advantage of the $25 referral bonus for each one of them? Lastly, will I pay taxes on their interest? Thanks for your help.

  8. Make Friends, Earn Money Says:

    These are all really excellent points although I would personally stress the importance of no 4 “Give them a set allowance”. I think that budgeting is one of the best foundations any parent can give to their child when they are growing up.