How to Teach Your Child to Save Money


Help your child at an early age to start and build a savings account. Give your child an opportunity to earn money and add to the account on a regular basis.

At some point in elementary school, nearly all chil­dren learn to define their own socioeconomic status. They know they are richer than some people and poorer than others. A savings account can give your child the feeling, “I’m not as bad off as people may think. I’ve got some wealth they don’t know about!”

A regular pattern of saving teaches your child delayed gratification. Children are often willing to forego fads, if they are saving for something specific and know that they have money accumulating toward that goal. A child who wants a car someday, and who knows that he can buy one if he saves just one dollar a week in an interest-bearing account, is a child less likely to waste money on alcohol, junk food, or video games.

Give your child purchasing goals to shoot for, some­thing to save for. Don’t buy everything for your child. A child has the right to expect you to provide for basic needs but should not expect you to provide all of his whims and wishes. Some items do make wonderful sur­prise gifts (for example, a stereo or telephone), but luxury items often have greater value to your child if you let him or her earn them, plan for them, and antici­pate them.

Earning and saving money is a process that builds in your child an understanding that work and effort have value that can be measured. Give your child opportuni­ties to earn money. Always include a savings require­ment. Even within a savings account, you may want to differentiate between savings that can be tapped for luxury purchases and savings that are longterm (for col­lege or for a “home of your own” someday).

From time to time, discuss your child’s finances. Talk about the wisdom of purchasing a savings bond, for example. Reflect on how many hours it takes to earn certain things. Many children grow up thinking that money is somehow magically available to their parents; they have little concept that Dad and Mom earn their money and that a good wage is not easy to come by.

Going to the bank, dealing with bank books, and bal­ancing accounts gives your child the confidence that comes from managing money and dealing with an im­portant institution.

I am frequently amazed at the number of adults who don’t know how to make a budget and don’t know how to balance a checkbook. Teach your child those skills. Decide together how he or she is going to budget an allowance or earnings, and what percentage is to be saved. Take your child to the bank. Let your child listen in on your basic transactions and become familiar with financial terms.

Finally, consider these do’s and don’ts about your child’s money.

  • Never encourage your child to put money into something risky. A child can become very discour­aged if he or she loses money in the stock market; (so can adults, for that matter!)
  • Never borrow money from your children. They won’t understand and may not readily forgive your inability to pay or your forgetfulness in repaying the loan.
  • Do encourage your teenage child to have a check­ing account. Teach your teen how to write a check and how to keep track of deposits.

Give your child the confidence that comes from earn­ing, saving, and managing money. Give your child the opportunity to make financial decisions and to learn fi­nancial procedures. He or she will grow into an adult that knows, “Mom and Dad thought enough of me to prepare me for the day when I’d be self-supporting and on my own.”

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About the Author: Roberta Southworth is a psychiatrist by profession. She likes to help out people by writing informative tips on how people can to solve their family and relationship issues. She is currently staying in Ireland. She has 5 years of couple counseling experience.

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