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Teaching Kids About Money

Key Takeaways

  • Ways to help kids save will vary based on the ages of your children and their savings needs.
  • Encourage your children to set aside money in their savings accounts by giving them small rewards when they deposit money in the bank.
  • If they aren’t old enough to work, find practical ways to help your child earn money.

It's never too early to start teaching your children about money. Even small steps, like setting a good example with your own spending, can help improve the financial literacy of your kids. For example, stick to your budget, compare prices when you shop and regularly contribute to your savings. When you practice good saving habits, you're teaching your kids to save.

Age appropriate savings tips

Savings tips for kids vary based on the ages of your children and their savings needs. You'll also want to consider where they will be getting money and how much money they’ll have to contribute to savings.

  • Ages 2-6: Encourage young children to save with a piggy bank, and eventually consider setting up a savings account for them by the time they’re in elementary school. Educate your children on the difference between needs and wants. Remind them, when shopping, that things cost money.
  • Ages 6-11: Teach children, by elementary school, how to identify and count money as well as make change. This is an important step towards financial literacy for your kids, and you'll want them to have a good handle on these basics at a young age.
  • Ages 11-17: Show children, in middle and high school, how to keep a financial journal to track spending and deposits. You should also work with your children and teenagers to create a budget, and consider opening a checking account with your teenagers after they turn 16.

Consider providing an allowance

Teach your kids to save by allocating an allowance in exchange for chores around the house. For young children, it's a great way to practice good saving habits and figure out where money comes from. For older children, an allowance can teach them the value of a budget, living within their means, saving and even giving to charity.

When setting an allowance rate, consider using this formula (Age x $1). In other words, your eight-year-old will get eight dollars per week, with an annual raise of one dollar. Make sure to pay their allowance in small bills so it's easier for your children to budget for expenses — and encourage them to put at least a dollar a week towards their savings account.

Set goals and incentives

Encourage your children to set aside money in their savings accounts by giving them small rewards when they deposit money in the bank. You might want to adjust the rewards as they get older, but consider the following ideas for young children:

  • For every $20 saved, take them out for ice cream.
  • For every $40 saved, let them pick out a book the next time you're at the store.
  • For every $50 saved, add five dollars of your own.
  • For every $100 saved, add $10 of your own.

Also encourage good saving habits in your older children by helping them with bigger purchases. If they can save the majority of the money to purchase a new computer, volunteer to pitch in the last hundred dollars. This will motivate your teens and show them you're interested in their hobbies.

Help your kids earn money

Teaching children about saving money goes hand-in-hand with teaching them about earning money. You could choose to set up an allowance system, encourage them to be young entrepreneurs or a combination of the two. Here are some practical ways for young kids to earn money:

  • Offer them half of the money from returnable bottles and cans if they help collect and return them.
  • Ask to help neighbors with yard work.
  • Host a neighborhood car wash in the driveway.
  • Babysitting.
  • Walk dogs in the neighborhood.
  • Set up a lemonade stand or sell baked goods.
  • Offer them the proceeds from any toys or games you sell at a garage sale if they help you set up and clean up.

More information

When that piggy bank starts to fill up, open a joint savings account with Citizens Bank. A savings account allows your children a safe place to set aside money and track their progress with our online goal tracker. As they get older, you could encourage them to contribute to a college savings account. For more information about our savings accounts, call 1-877-360-2472 or open a savings account online today.

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