So, you're teaching children to save money…and it's just not happening. Let's figure out why your kid's not saving and solve it with these 15 tips on saving money for kids.
Sooooo, your kid’s not saving money. In fact, they’re spending it faster than bubble gum companies can restock the checkout shelf (or at least it feels that way).
And you’re starting to wonder if this handing-over-money-to-your-child thing is just another way your hard-earned money has found a reason to exit your OWN savings.
I mean, how the heck are you supposed to teach kids money management or how to teach your child the value of money when they see it as a free-for-all?
Today I’d like to talk to you about how to dig deeper into the age-old problem of a kid who spends their money.
ALLLLL of their money.
Why Teach Kids to Save Money
Here's the deal: if I could choose only ONE lesson that I could help you teach your kid(dos) about money – and there are umpteen numbers of lessons to choose from – then I would choose how to save money, hands down.
I’m not a betting woman, but if I were, I would put ALL my chips onto that one.
Saving money – the automatic outcome to another important money lesson of spending less than you earn – gets people out of a lot of problems.
It helps people do things like…:
- Have an emergency fund/buffer savings to tap for those life oopsies.
- Set aside money for retirement.
- Have money to start investing.
- Put a down payment on a home.
I could go on. But instead, I’ll jump into ways to get this lesson to stick. Because let’s face it: saving money does not come naturally to many people.
Let’s attack the challenge of teaching your kid(dos) to save their money from all different angles. I’m going to show you 6 big steps you can take to implant a healthy savings habit into your child now – before their checking account depends on it.
How do you teach kids to save? First Figure Out Why They Aren't.
I’m going to give you a rundown of 9 different reasons for why your kid might not be saving their money, so that you can do some digging and get to the bottom of the behavior.
After all, every kid is different, right? Awareness first, then you can redirect the ship!
Reason #1: They Don’t Have a Savings Goal.
The best, smallest action step you can take to get your children to care about saving money (or money in general) is by asking them to set a savings goal.
You can talk them through the entire goal setting for kids process here, but in a nutshell:
- Ask them what they would like to be/do/have outside of what you guys provide for them.
- Walk them through prioritizing all their funny, lovely ideas down to just the ONE that makes sense for right now (hint: that’s usually the quickest win, as kids are not at the stage where they can happily live out pleasure sacrifices for long).
- Ask them if they know how they can be/do/have that.
- Help them research and price the cost of their savings goal.
- Help them come up with a savings plan for how to actually get there.
Bonus: have them write their savings goal down. According to this study, 68% of kids with a written down savings goal track their spending. And tracking your spending? That’s just a hop + skip away from saving enough money to get what they want.
Reason #2: They Don’t Believe It’ll Ever Happen.
Do you know how hard it is to believe that something you’ve never seen successfully occur, will actually work out? If your child has never seen the other end of a savings goal, then they may not believe – especially come week 3 of setting aside money they could be using to buy more Pokémon cards – that it will ever actually happen.
This is why it’s so important, at this stage in the game, to help them prioritize the savings goal that is the quickest win. Today, choose a savings goal that will take them 2 weeks or two-allowance/chore commission cycles to accomplish.
And next year? They’ll be more able to tackle one that’s a few months out.
Reason #3: There Aren’t Clear Money Expectations Lined Up.
If your child thinks you might end up buying them what they want to be/do/have, then there’s no real reason for them to start saving money towards it, right?
Once you learn what your child would like, you need to set up clear expectations for them with who is going to pay for it. Are you going to pay for part of it? Or is the whole responsibility theirs? Can they ask for it at a holiday/birthday occasion?
In the future, you can help clarify things by categorizing what is their responsibility versus what is yours, such as your teenager taking over all responsibility to pay for their weekend hangout with friends, or your 8-year old taking over responsibility to pay for any candy they happen to put in the cart at the grocery store.
Because let’s be honest: if you thought YOUR Mom was paying for your new sneakers, would you save a penny for them? Heck, no! I sure wouldn’t (Mom, if you’re out there, I’d like the Nikes).
Reason #4: They Haven’t Witnessed Good Saving Behavior.
Don’t beat yourself up for this one – I sure as heck am not. But it IS a reason for why your child may not be saving their own money. Have they witnessed good savings behavior from you or your spouse? Do they know what saving money is?
This would be a great time to open up the savings conversation and show your kids what you guys are saving for, the sacrifices you’ve made, and how great it is when you actually get what you want. Teaching children to save money doesn't have to be hard when you can model it yourself.
Psst: also, check out this article on how to save money as a child.
Reason #5: They Don’t Earn Enough Money Beyond Paying for Responsibilities.
Have you laid out money responsibilities for your child to pay for…that very closely exactly aligns with how much money you’re giving them? If that’s the case, then they certainly won’t be able to stockpile any (though you could challenge them to become creative in how they buy what they need, such as use a coupon, or buy in bulk and dole it out in the same amount they would have used anyway, etc.).
What would happen if you increased the amount of money that you gave them, or took away one money responsibility that they need to pay with it? Who knows – but teaching your child to save money might be on the other side of that.
Reason #6: They Have a Weak Instant Gratification Muscle.
Hint: Most kids have this one. Especially if you're teaching preschoolers about money.
It turns out many of us aren’t born with the strong ability to look instant gratification in the face and turn a cheek.
But you know what? You can actually stretch and grow your kiddo’s instant gratification muscle. Check out my post all about how your child can learn to grow their instant gratification muscle.
Reason #7: They Have No Incentive to Do So.
If we’re going to be honest with ourselves, then most of us can say we need an incentive to actually do something.
Does your child have any sort of incentive to save their money? Incentives could be:
- Matching contribution from you guys.
- Interest earned in their savings account.
- Having had success meeting a savings goal before and getting to buy that sweet thing they wanted to do/be/have.
Hint: this is why the fed raises/lowers interest rates. They want to bait us all to either spend more money/take out more loans, or to stop spending so much money/save more of it.
Reason #8: They Don’t Have a Physical Space to Save their Money.
Does your child have a physical separation between money they’re going to save, and money they’re going to spend?
This could look like:
- A mason jar for savings.
- A compartmentalized piggy bank.
- A wallet with one slot to spend, the other to not spend today (though this is very short-term if it’s as accessible as reaching into a different slot).
- A savings account.
Reason #9: They Don’t Understand the Value of the Money They’ve been Given or Earned.
Your kiddo might not actually get the awesomeness of the money they’re given or that they've earned. Because they might not understand that a little bit of money, set aside for a period of time, adds up to a lot of money.
Like today, they might look at their allowance as candy money. But you need them to see that, given time to accumulate from week to week, it’s actually skateboard money, or video game money, or rock-climbing camp money.
Pssst: Check out this article on how to get them to understand the value of their money.
Oh, the power they have in their hands! If they can only realize that it just takes time and some restraint.
There you go. Now you want to assess where your own child is getting hung up on – or the MULTIPLE places they’re getting hung up (more likely) – so that you can work on getting rid of those specific road blocks to saving money.
How to Teach Kids to Save Money – Saving Money Tips for Kids
Have you ever noticed that, aside from that 10% or so of kids who seem to have been born with a money-hoarding mentality, saving for kids is about as “second nature” as driving a car for the first time?
I want to tell you not to worry, because savings can eventually become second nature, especially with the tips I’m about to share below.
Here's what parents can do to teach children to save money:
Tip #1: Designate a Savings Space
Let’s talk about the actual process of letting money accumulate.
Your child needs to learn that money can accumulate when it’s left alone – both from compound interest earned in a savings account, and from saving a few dollars from allowance-to-allowance.
In order to see that, you’ve got to set up saving-money spaces, which sets up the expectation that there should be savings (chances are better that it'll happen with a saving-money space, than without one).
Otherwise, you might just continue to find it crumpled up on their bedroom floor (*gasp*! Yes, I’ve had more than one Mama Bear tell me this is an issue in their household).
Action Step: Set up a bank-trip day in your household. Let your kiddo know that on this day (weekly, bi-weekly, or monthly), you’ll be swinging by their savings account bank and they can make a deposit. And to get them really motivated? Swing by on this day, even if they have no money to deposit. It’s a nice reminder for them to save their money.
Tip #2: Let them Name their Savings Space
The easiest way to get a child to care about saving money is by getting down to a savings goal for something they want to be/do/have. I talk about that much more in depth here. Once they have that savings goal narrowed down?
Psst: Here’s a 1-page guide you can go through with your child to narrow down all the things they want to do/be/have to the one with the quickest win to start their target savings journey.
Then you want to encourage them to name their savings space something fun having to do with it. You could put a label on the outside of a mason jar, or add a nickname to their savings account online to do this.
There is power in naming something.
Naming something gives it a purpose. A place to focus an intention.
Savings accounts are no different when it comes to both needing a name and an actual purpose (which go hand-in-hand, by the way).
When a savings account lies around, unnamed, it’s this sort of blob.
Sure, it can grow. Sure, you can use it for goals as they come and go. But without naming it something that aligns with its purpose, the time it’ll take you to get to whatever goals you have will take longer – no matter if you’re a child or an adult.
Clarity is powerful, after all.
Leave an un-intentioned amount of money aside for too long, and suddenly it becomes the perfect amount to spend on a new video game, or absorbs a convenience-store candy section addiction.
Account money gremlins are a real thing, my friend. Whether you've got a kid savings plan or an adult one!
How to Guide Your Kiddo through the Savings Account Naming Process
I hope I’ve convinced you that that this naming thing? Is sort of a big deal. Getting your child to do it early means you’re setting them up for more savings success for the rest of their lives.
So, let’s get started with this mini-savings action step that makes saving for kids much easier.
Step #1: Set Up Somewhere for your Kid(dos)’ Money to Grow
The first step, of course, is for them to have an actual place to accumulate their money.
- Don’t have a savings account open for them yet? I’ve got you covered with how to open your baby’s first savings account (whether they’re still a baby or waaaaayyyy past the pacifier stage. No judgment here!).
- Not ready to do that? Then you’ll want to use a piggy bank of some sort. Here are 21 particularly cool piggy banks for your kid(dos).
Step #2: Help Your Child Identify their Savings Goals
Sit down with your child and ask them what their goals are for their money.
What do they want to buy soon? What do they want to buy later?
Hint: they might not know how to prioritize now rather than later at this point in their lives, and that’s where you can help them.
Your idea for the purpose of their savings account is probably going to be quite different from your child's. After all, you've been in this thing called the “real world” for quite some time now. You aren't wet behind the ears, and you know that life takes money.
So your ideas may be things they'll need to purchase in their teen and early adult lives, such as their first car, textbooks for college, college in general, etc.
Their savings goals? Well they might be a bit different than yours. More tangible and instant gratification-y like vacation spending money for the summer or a new video game that's due to hit the markets next month.
So, it’s best to find some sort of compromise. And if you’re just teaching your child how to save money as well as goal setting in general? Well then you should probably stick with a short-term goal until they grow their instant gratification muscle a bit.
Remember, you can build up to the long-term goals over time.
Step #3: Rename their Account or Piggy Bank with something Cool
Once they’ve gotten clear on what they want to save for in the short-term (remember, start short, then go long), it’s time to come up with a cool name they can associate with the goal.
This name is one that gets them excited, and can pull them back into the process once they’ve lost interest in savings.
Here are some savings goal ideas, with a spiced-up version on the right side:
- First Car Fund = Sweet Sixteen Freedom
- Vacation Spending Money = Boardwalk Money (fill in wherever you’re going)
- Textbooks = Astronaut textbooks (whatever career they’re interested in right now)
- Video Game = Pokémon Ultra Sun Release
- Toy = Stuffed Flamingo
How to Physically Name Your Savings Space with this Goal
How you physically add a name to your savings space (either savings account or jar) depends on where it is.
If you've got an actual savings account, then find it below + click for nicknaming instructions:
- TD Bank
- Wells Fargo
- Bank of America (look at the lower right-hand sidebar for where to go after you sign in)
For us, I have my two-year-old’s savings account at CapitalOne360. At their bank, you can change the “nickname” of each savings account you own.
Here’s how I do this:
Step #1: Sign into the account.
Step #2: Click on the account you want to change the name to.
Step #3: Click “Add a Nickname.”
Step #4: Type in the nickname + click “save.”
Then if I want to change the nickname? I can do so at any time by clicking on the account that I want to change, and then clicking “Account Details.” There’s an option next to the “Account Nickname” to “Change Nickname.”
If you are using a piggy bank of some sort? Then you’ll want to write the new nickname down on a piece of paper and tape it to the bank. You can let your kids write the name + decorate the label however they’d like using crayons, colored pencils, glitter – the works! Whatever gets them excited about their new name + corresponding goal.
You + your child may not have considered the power behind naming savings accounts by the goal that you're trying to meet before. But I hope you’ll trust me on this one and take the time to not only set up a space for savings, but then name it based on either a short or long-term savings goal.
Tip #3: Set Up a Consistent Kid Money SystemLet me ask you something. So, your boss gives you a $1000 check this week. And two weeks ago? It was $2600. And then two weeks from now rolls around. Guess what? You get nothing.
You’re probably feeling kind of flabbergasted, right? Worse yet, since you don’t have consistency in what you’ll be receiving, you can’t really plan for anything, you’re putting out fires, and you don’t trust that the money is coming so you aren’t putting anything into savings knowing that more will be coming soon.
Your Kid Money System matters, and if it’s not consistent, then your child probably won’t save money. Your child needs to know when they’ll be receiving money and how much they’ll be receiving, in order to plan ahead for spending (which really means, in order for them to feel like they can actually save money and even create a savings goal, instead of spending all of it today).
Not only does your Kid Money System need to be consistent, but it also needs to have clear money boundaries and responsibilities outlined so that your child understands WHAT they are responsible for and what you are responsible for paying.
Tip #4: Help Them get Clear on a Savings Goal
Your kiddo – just like us adults – will be much more motivated to save their money if they have a very specific goal in mind.
Help them come up with their goal to save for, and then tie every money conversation/money question they have back to it. Wow will those conversations be more meaningful to them!
Tip #5: Help Them See their Money Waste
Isn’t it so frustrating when your kid buys something that (and you know this ahead of time – ahhh it’s almost a curse how clairvoyant we Mamas are, right?) they’ll stop playing with next week?
So, how do you get your kiddo to stop wasting their money? Well, they’ve gotta understand that money has value. That not spending their money on something that has very little use for them, and instead spending it or saving it up for something that will make a bigger difference in their life is the way to go.
Action Step: Take a toy-graveyard inventory with your child. Ask them to gather a hand full of toys that they no longer play with because they lost interest. Now you go in and gather a hand full of toys that they “wasted” money on because they bought them (or you bought them at their pleading) and they stopped playing with after just a few uses. Take out a pen and paper and get them to help you estimate what each toy cost at the time of its purchase. Then tally up the total. Reveal this to your child, then ask them how they would feel if, instead, they had this money in their savings right now.
Tip #6: Break their Allowance-to-Allowance Cycle
Does your child currently live an allowance-to-allowance mentality? In other words, they spend all their money as soon as they get it, chomping at the bit for that next bit of allowance to flow into their lives and keep all their amazing wants afloat?
That’s a seed to paycheck-to-paycheck living.
Maybe it won’t lead directly to a paycheck-to-paycheck life. But it certainly seems like it could, right? Not to mention 50% of Americans live this reality, so it doesn’t seem like such a far stretch.
We want to keep your child securely in the other half of that 50%.
Let’s change that now, when losing their next paycheck doesn’t mean piling on tons of debt.
It’s time to break that allowance-to-allowance mentality by teaching your child to save their money first from week to week, and then from month to month.
Wait a Sec…My Child Has Already Developed an Allowance-to-Allowance Mentality
Rest assured, Mama Bear. You’ve got time to turn this money ship around.
Saving money for kids doesn't have to be hard. Instead, it can be incremental.
I’ve got some tweaks you can make to your current allowance system that I’m numbering from least aggressive to most aggressive. Sometimes your child will get the hint (the least aggressive option) and other times it’s going to take a bit gentler nudging.
Note to yourself: doesn’t matter which one they take to. No judging here! We’re looking for results, and each child is different. If your child needs one over the other it doesn’t mean anything.
Also, one may be more appropriate for where your child’s money development is than another. Or you might fear being too controlling or helicopter-y, in which case you’ll want to pick one of the more hands-off approaches while still (hopefully) getting the result you want.
Allowance Tweak #1: Pair their Allowance with an Incentive Program
Saving money for kids could be as simple as giving them an incentive. Heck, it works for adults!
Introduce an incentive, just like banks have, when your child saves part of their money. But only for the dollars that make it past the allowance period. For each dollar left at your next allowance rollout, give them $0.25. Or $0.50. Or $1.00.
How will this change your child’s savings mentality?
Depending on how chiseled your child’s instant gratification muscle is, you could start with a one-week incentive, a bi-weekly incentive, or a full-month incentive. Pick the one that is a stretch, but not outside of the realm of their ability.
Allowance Tweak #2: Stretch their Allowance by One-Notch
The longer the time in between when they get allowances, the more they’ll have to adapt to planning, budgeting, and actually saving their money.
So stretch their allowance period one notch up from wherever it’s at right now.
- On-Demand: If you’re doling out money on-demand, then instill a weekly allowance ritual to introduce the concept of waiting + budgeting their money.
- Weekly: Take their allowance to bi-weekly.
- Bi-weekly: Take their allowance to monthly.
Allowance Tweak #3: Tweak the Amount You’re Giving Them
Hand over a few purchasing responsibilities to your child, but don't actually give them enough in each of their allowance payments to cover both what they want AND what you have told them they are responsible to pay for.
I mean, how many of us adults get paid enough in each of our paychecks to cover everything we want AND need at the moment? Not many (certainly not me!).
This means if they don't learn to carry over (i.e. that dirty word, “save”) money from one allowance payday to the next, then they never get what they want. Or they make an even worse decision, and not buy what they need, making the lesson hit home even harder.
Eventually, they’ll get the hint.
Note: I think this one will need to include some conversations from you to remind them that you are fully giving them enough money to buy the things they want + are responsible for, but they need to manage their money differently in order to see it happen. Talk about a teachable money moment!
What this could look like to increase saving money for kids:
- You let your child know they are now responsible for a few extras they’ve been sneaking onto the grocery list (aka a ‘want’, such as that really expensive designer shampoo you’ve never even purchased for yourself), plus something that has previously been paid for and chosen by you (aka a ‘need’, such as their backpack for next school year).
- Figure out how much extra they should receive in order to be able to cover these extra responsibilities you’ve given them. In other words, figure out how much you, as a responsible and budgeting adult, would be comfortable paying for each item. Then if the child wants to splurge to the next level, they’ll have to figure out whether or not spending their own money on the extra is worth it + how to actually save up to make it happen.
- Increase their allowance amount to account for the extra costs they’re now responsible for, but not so much that they can pay for the items in one fell swoop. How far should you stretch it out? Well, that’s up to how far along you think their instant gratification muscle has developed.
Pick one of these allowance tweaks, and go with it. Test it out for a month or two, and then tweak it or move on per your child’s taking to the actual lesson you’re trying to impart: curtailing the allowance-to-allowance mentality by having them discover the need to save their money.
P.S. I love that You Want to Teach Your Kids to Save Money
I interviewed 16 Mama Bears about what they want to teach their kid(dos) about money (such as, kids save money? Stay out of the debt cycle? Investing? Etc.).
But I didn’t just want to know the steps they were taking, or what custodial financial accounts they had opened. I wanted to also understand their own money hang-ups and relationships.
I was pretty shocked to find out that 14 out of 16 of the women who took the survey said they’d received little to ZERO money education from their own parents.
Their answers to what kind of money education they received as a kid say it all:
- “Little to none. My mother had a terrible relationship with money and either had none or spent it like it was water if she had any.”
- “None. I mean I would say virtually none. My parents never sat down and they didn't even sit down and show me like when I got my first checking when I went to college. I didn't even get any education around that.”
- “None. My mom had and still has credit card debt. You would think I would have learned to avoid the struggle but I didn't.”
- “Life. Nothing formal.”
The thing is? I know you’re different. You want to teach your child one of the most important life skills you can – money management – because you don’t want them to start out in the deficit (figuratively, and literally) that you did.
The steps above will help you with just that.
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