Close this search box.
Blog » Personal Finance » 25 Ways to Help Your Young Children Save Their Money

25 Ways to Help Your Young Children Save Their Money

Simple Money Cheat Sheets

Did you know that kids aged 4 to 14 receive an average weekly allowance of about $9.35? That comes out to roughly $486 per year. Which, really isn’t all that bad for daily chores like tidying their bedroom or helping with laundry.

Even better? It’s also been found that almost half of the average kid’s weekly allowance is saved. While kids may not have the same financial obligations as their parents, this is certainly encouraging. Saving money ensures financial independence and security during an emergency. More specifically, this habit encourages discipline and goal-planning. And, it can prevent a potential financial crisis.

With that being said, if you’re a parent, you can help your young children step up their saving game using the following 25 strategies.

Start with the basics sooner than later.

In 2001, Sam X Renick created Sammy Rabbit, a character and financial literacy initiative for children. He has been teaching kids about money through his Sammy Rabbit stories since then. It has been his experience that the earlier you start teaching your children about finances, the better. Money habits and attitudes are formed by age seven, he says, so lessons need to begin before then.

Your children should be introduced to coins and cash when they are old enough to know they shouldn’t eat pennies. Describe how money works and why it is important to save money. Rather than telling them how money works, you should show them. You can do this by showing them how you use cash.

You should always tell your children that you’re using money to make purchases, regardless of whether you use a debit or credit card. Chase Peckham, director of the San Diego Financial Literacy Center, taught his daughter and son this when they were young. On every shopping trip they took together, Peckham showed his children the receipts with the amount he had paid. “By doing it over and over again, it became habit to them,” he says. “As they got older, they started to understand. That’s how we introduced money.”

The receipt strategy allowed Peckham’s son to understand how money works by the age of 4. However, getting his daughter to understand was more difficult. Consistency, however, guaranteed that “the light bulb would turn on” — which it did.

Talk about money.

According to a 2021 survey by T. Rowe Price, 41% of parents are reluctant to talk to their children about money. Moreover, many express embarrassment when discussing money.

In order to teach kids how to save, you must sustain an ongoing dialogue. The key is to keep the conversation going, whether you schedule a weekly check-in to talk about money or make it part of your daily routine.

Be a financially responsible role model.

Educate children by example by saving money yourself. This is the most effective way to teach them to save money.

Put funds into your own jar of money frequently, for example. As you’re out shopping, teach your kids how to discern different prices and why some items are more beneficial than others. Also, emphasize that you save a portion of every paycheck as a way to secure your financial future.

Use a piggy bank.

By providing your kids with a piggy bank, you can teach them the importance of saving and make it easy for them to do so. To fill up the piggy bank until there is no room, tell your children to put in as many dollars and coins as they can.

Most importantly, demonstrate that the piggy bank is for saving money for the future. And, this will result in wealth accumulation.

As an example, Kevin O’Leary from “Shark Tank” explained compound interest to his own children by using a piggy bank in this video.

Develop their budgeting skills.

As you know, a budget helps create financial stability by tracking expenses and following a plan. And teaching your kids how to budget is a crucial life skill they need to develop sooner than later.

Use jars to teach your children basic budgeting concepts by spending, saving, giving, and sharing. You can show younger children how Elmo from “Sesame Street” saves in those three jars.

As your child’s chores or allowance are complete, discuss with them the importance of;

  • Saving money now so it will grow for later use
  • Making a plan for how to spend the money that they have now
  • How caring means sharing their funds with people and organizations that your family values

Physically show them that things cost money.

It’s one thing to tell your son or daughter that that Paw Patrol vehicle they’ve been eying up is $10. It’s another thing to have them take a few dollars from their piggy bank and hand it to the cashier at the store.

Sure, this is a simple act. But, it will have a greater impact than having a conversation.

Write down savings goals.

According to psychology professor Gail Matthews, writing your goals down on a regular basis makes them 42% more likely to be achieved. And, yes, this can be applicable to children as well.

When they write down a clear savings goal, they’ll be motivated to follow through. Additionally, you can help them break this goal into achievable. Let’s say they want a $60 Lego set. Help them determine how long it will take for them to reach that goal if they receive $10 a week for doing chores.

Also, help your child understand that there are two types of savings. One type of savings is saving for the Lego set, a game card, or a special pair of Allstar shoes. However, the other savings is the savings we never touch — it is for emergencies and to build enough funds for investment.

Use stories to inspire.

“Beyond writing down goals and providing interest payments, I’ve also discovered that stories can be educational and inspire kids to keep saving,” writes Kerry Flatley, owner, and author of Self-Sufficient Kids.

“I’ve shared a few stories with my girls of times when I had to save – for my first car, for example – to provide insight into how saving works in the adult world, where purchases are larger and more critical.”

Additionally, Flatley and her children have read a few books together on how people stick to their savings goals — or don’t.

She recommends the following three books;

  • “Rock, Brock, and the Savings Shock”
  • “Alexander, Who Used to Be Rich Last Sunday”
  • “Bunny Money”

Give them fake money.

This might seem a bit out there. However, the positive aspect of fake money is that it teaches kids about how money works without involving any real money. Essentially, it’s a set of training wheels for future consumers, with you acting both as merchant and bank.

To make this stick, assign reasonable values to various chores, such as making their bed or cleaning up after a meal. You can also apply this to privileges, such as movie night and their wants, like popcorn for said movie night.

Create a timeline.

Kids often have difficulty understanding the concept of time and money. In fact, it’s been found that one-hour financial lessons lose their impact after five months. As such, a timely and ongoing approach to money education is needed for the message to stick.

If, for example, your child receives $5 a week in allowance and they want to save $50. Their goal would be reached in roughly three months if they saved 100 percent of their allowance. To really bring this home, use visualization.

You’ll need a long piece of paper and a marker to begin. On one side of the paper write 0 and on the other side write 50. Make checks for 25%, 50%, and 75% of the goal on the paper.

If an amount is saved, draw a line showing the amount that they saved. Also, explain that at each checkpoint, kids will be given small rewards. Rewarding kids in this way can encourage them to stay the course. Also, visual representations assist them in illustrating how their money is growing and how their savings goals are progressing.

Consider making earning money a competition.

You could make money-making a contest if you have more than one child.

“That always brings out the competitive nature of the kids. Whichever child saves the most gets the biggest special treat or bonus,” Lamar Brabham, CEO of Noel Taylor Agency, told U.S. News.

In order to make sure that your kids are good sports if they lose, you could always set up a series of contests to increase the chances that both will win.

It will help, however, if you make teaching your kids about finance an enjoyable experience, Brabham says, noting that many adults have a difficult time dealing with the world of finance.

“Words like boring, confusing, complicated, and scary are common when hearing someone describe money matters. You can imagine what children think of it,” he says.

Play games.

Do you and your family play games together? Board games in particular can be fun while also teaching priceless life lessons as well. Ideally, you want to pick games that teach financial basics, like the Game of Life, Pay Day, or Monopoly.

Additionally, there are some games that specifically teach money management techniques, such as Cash Flow 101.

Make sure kids get paid fairly for age-appropriate chores

When you give young children an allowance without requiring them to work, make sure it’s fairly distributed and based on their age. If you prefer, you can give them quarterly or annual raises. Most importantly, assign equal work assignments, as well as similar pay rates if you pay for chores.

Unfortunately, the gender wage gap has reached children as well. According to BusyKid, an app that tracks personal finances for kids, girls receive less than half the weekly allowance given to boys. Believe it or not, that gap is far more severe than the one that exists for adults.

Offer savings incentives.

Matching contributions from employers are perhaps the main reason people make contributions to their company’s retirement plan. Everyone loves free money, right? Well, using that same principle will help you motivate your kids to start saving.

You can match your child’s savings by 25 or 50 cents on the dollar, for example. Not only does this help them increase their savings, but it also introduces the idea of company matching in 401(k) plans.

Discourage impulse purchases.

As a parent, I’m sure that you’ve been in this situation before. You go to Target and your child pleads for you to buy them Chase’s transforming police car from PAW Patrol.

As opposed to caving in, remind them that they can use their savings. But, also suggest that they wait a day or two. Maybe after sleeping on it, they really don’t want this new toy. But, just reassure them that Chase and his police car will still be there if they decide that they really want to buy it.

Also, depending on their age, this could be a great time to talk about opportunity costs. By fifth grade, children should understand this concept.

Help them prioritize their needs and wants. Impulse buying happens to the best of us from time to time. But, help them to learn to recognize it and how to limit it.

As little as possible, give kids money.

Yeah. This might seem harsh. But, here’s the jest. When kids are given as much money as possible less frequently, they will learn to budget.

As an example, instead of giving your 10-year-old lunch money every single day, give them $80 for the entire month. Remind them that if they spend all of this money too soon, they’ll have to eat PB&J every day.

In this way, your children will understand the real meaning of money and the need for budgeting and deferral of expenses.

Make use of age-appropriate spending cards and parental control apps.

Today, you use apps for just about everything. So, why not use an app to improve your child’s financial education?

With Greenlight, you can reload a prepaid debit card for your kids. Through an app, you can supervise and control the card. The card is designed to load instantly, leave notifications every time your child uses it, and turn on and off instantly. Another feature worth mentioning is that it also lets them save their change.

Stress the importance of giving.

I remember during a family vacation to D.C. my little brother struck up a conversation with a homeless vet. Without hesitation, he gave the man $5 from his allowance.

With that in mind, when your little one has some money saved, teach them the power of giving.

“I think helping our kids experience the happiness that comes from giving to others is probably one of the most valuable ways we can nurture generosity in them,” says Lara Aknin, an assistant professor of psychology at Simon Fraser University in Canada (and the one who led the study suggesting that giving makes toddlers happier than getting). “It sets off this positive cycle: Giving makes people happy and happiness promotes giving.”

At the same time, don’t force them to do this. Researchers have found that when people are forced to do something kind for others, or subtly coerced to do so, they will feel less altruistic and less motivated to help others.

Include them in the financial process.

Encourage your children to help you save money while shopping. Ask them to find the right items and compare prices with coupons from the grocery store, for instance. You can also challenge your child to find the clothes they need within a limited budget when back-to-school shopping.

The older your children get, show them what your mortgage or utility payments look like. Or, you show them what your 401(k) statement looks like. Sounds simple. But, having them be a part of your financial processes is good preparation for when they have their own financial documents.

Kid blew all their money and needs more? Seize this teachable moment.

Parents familiar with this scenario might be able to relate: your kid has money but spends it all on toys. Imagine you are at the toy store again, where they want something but can’t afford it.

How do you deal with that?

Don’t give in. Instead, use this as a “teachable moment,” suggests says Rachel Cruze, personal finance expert and the co-author of “Smart Money Smart Kids: Raising the Next Generation to Win with Money

“Teach them that when money runs out, it runs out,” Cruze says. “It will be tough in the moment, but in the long run you are teaching them to live below their means — and that’s the only way to win with money.”

Visit the bank together.

You and your child can open a no-fee savings account together. The concept of delayed gratification can be difficult for them to grasp. However, children may see the benefits of accumulating compound interest as free money if they equate it with short-term sacrifices.

Charge a “parent” tax.

I don’t think that many of us are fond of taxes. But, that’s life. So, this could be an easy way to break the news to your children.

To help them prepare them for the real world withhold some of their earnings. Be sure not to spend the money though. Instead, invest it or save it for them until they’re 18. By letting them know that they won’t keep every penny of their paycheck, they’ll be better prepared financially.

Also, let them know that if they have $5,000 saved by 16, they can invest this money and become rich. As a teenager.

Let them make mistakes.

You may think “that’s easier said than done.” But let me explain.

Almost everyone has regrettably purchased something, whether it was a Peloton we thought we’d use more frequently or an investment that was too good to be true. Since the stakes are low, now would be an ideal time for your child to make mistakes. Give your child the option of spending their money on a short-lived gimmicky toy.

Upon realizing a mistake, ask them what they’ve learned and how they can avoid making it again. Do they need to do more research next time? What can they do to remind themselves of what their goals are? How can they spend their money in a way they enjoy?

Perhaps, in the future, they’ll spend their savings a bit more wisely. And, since we’re talking about kids here, don’t be too harsh. In fact, you can share with them your past financial mistakes and the lesson you learned.

Don’t give your kids an open line of credit.

Make sure your kids do not have open credit lines. Spending money should be limited, even if occasional spoiling is possible.

After all, on other matters, you’ve been telling your kids no for a while. The same holds true when it comes to denying requests for cash or parent-aided purchases such as video games and candy bars.

The importance of imparting this type of financial education to young children cannot be overstated. When you delay, old habits will become more difficult for them to break.

Now, how exactly you approach this is totally up to you. Maybe there’s a family jar of money for expenses like snacks or activities like mini-golf. If they know the balance, your kids will be able to budget their spending accordingly and won’t be surprised when you say no. And, with time, they’ll realize that if they want a large purchase, they’ll need to save. that they need to save.

Open a 529 plan.

Share the fact that you are saving for your children’s future higher education with them. Even better, ask them if they want to contribute to the plan as well. Although you don’t need to share the dollar amount saved in your 529 plan with them, make it clear that you expect them to continue their education after high school.

According to a study by Institute for Higher Education Policy, children who know that money will be saved for college are much more likely to enroll in college. What’s more, kids with college savings of $1-$499 are three times more likely than children with no savings to attend college.

If you’re unaware, plan 529s are for any school your child wishes to attend after high school. As a result, these funds can be used tax-free for eligible higher education expenses including;

  • Four-year schools
  • Two-year colleges
  • Trade institutions
  • Apprenticeship programs
  • Certificate programs

In short, this means that your children are free to attend schools based on their interests, talents, and skills. And, this can set them up for financial success later in life since they won’t have a lot student loan debt.

Frequently Asked Questions

When should kids learn about saving money?

According to research, many of our money habits as adults are formed around age 7. So it’s wise to teach your children about money at a very early age. Children as young as 3 can start with basic concepts. As they grow, they can move on to more advanced ones.

How do I talk to my kids about saving money?

Curiosity is a natural, and often relentless, characteristic of kids. Teach young children that in order to make money, you have to earn it. Explain that money is a type of energy exchange. After all, money just doesn’t appear out of thin air.

Take going to the grocery store with them. Show them the budget for groceries and why it’s important. Tell them if they want a toy that it’s not in the budget. But, tell them to put the money in their piggy bank so that they can buy it later.

You can also involve your children in making money-making decisions that affect the whole family, such as booking a summer vacation, as they grow up. Consider sharing your experience with them when you’re negotiating a job offer or choosing a robo advisor.

How can I encourage my kids to save money?

Providing a place for kids to save their money is an effective way to get them to set aside some of their money. Kids younger than 12 can get a piggy bank; older kids can get a debit card or bank account. Incentives such as interest can also be provided to encourage them to save money.

What are some of the best ways for kids to earn money?

Children can earn money in a variety of ways. You might find them setting up a lemonade stand or having a yard sale depending on their age. They can also babysit, care for pets, collect recyclable materials, wash cars, and work in the yard.

If you have your own business, you could also “hire” them for age-appropriate tasks like filing paperwork or being a part of your social media marketing. Make sure to follow child labor laws.

How can you teach kids to distinguish between needs and wants?

Children can be quizzed about household items such as kitchen utensils, clothing, and toys. Ask them if it’s something your family really needs or if it’s just something they fancy. Kids learn that some purchases should have a greater priority than others as a result of that distinction.

About Due’s Editorial Process

We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

CEO at Due
John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.


Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More