Teaching children to save money should begin at a young age. In reality, saving is really deferred spending. It is important that children understand that the money they save is not gone forever. It is eventually spent for items that they need or want. One of the most effective ways to shape a child's behavior is to provide positive reinforcement whenever they speak or act the way you'd like them to. Find ways to teach about incentives, such as matching dollars saved, special treats that they enjoy such as a video, or a sleepover with friends. Do something that your child finds enjoyable. Try to make money saving a fun activity that you do on a routine basis. Also, let the child have a voice in what they are saving for. After all, it is the kids money. It is important to discuss with them how much to save out of monetary gifts, their allowance, or when they get paid for doing a job.
Things You Will Need
Clear plastic piggy bank or clear plastic jar
Before spending on anything, have the children put a set portion of their money in their bank. For younger children, I recommend using a see through "piggy bank" made of clear plastic. Using a clear bank helps young children see the value of their efforts as they watch their money grow. If you cannot find a clear plastic piggy bank, a plastic jar will work just as well. Just remember, "Try to make saving fun". For older children, the money should be placed in an account that you establish with them at a bank or credit union.
I suggest setting up the following as a method for you to teach your children to save. The first ten percent of whatever they earn should be placed in a church offering envelope to be taken to church every Sunday or to be given to a charity of choice. Another 40 percent should go into their savings with a portion of that earmarked for college. The remaining 50 percent can be spent on whatever they want. The percentages of saving and spending will vary depending on their ages. Each age group has different needs. As the children get older and their wants become more expensive, the percentage amount saved will have to be increased in order to save a sufficient amount to purchase the items they want in a reasonable time period.
It is important to allow children to spend some, but not all, of the amount saved from time to time so that they can see that the money is to be used when appropriate. Too much of a strict approach can turn a child into a miser. Remember, money itself doesn't cause problems, but the love of it does. Let your children enjoy the fruits of saving from time to time.
Try to make saving a fun activity that you and the children can do on a routine basis and let them have a voice in what they are saving for.