Teach Your Kids Great Money Skills, One Day at a Time

We all do better when someone demonstrates a new idea for us; we all learn differently, but watching someone do something while explaining it is one sure fire way to solidify whatever you’re learning. Have you ever wished someone had really shown you how money works and how to save money before you went out on your own? When money is involved, kids need someone to demonstrate for them how money works, especially when it comes to saving versus spending. However, this kind of lesson takes a long time to learn, with the dedication of daily or weekly choices to show how saving works over time. Children benefit from seeing adults in their lives who are able to delay gratification and save small amounts of money for a big pay-off in the end.

First, Set a Goal

In a family meeting, you can start the process by coming up with an item or experience that will be the end goal of the family savings experiment. It can be as big as saving for a weekend away or a year’s membership to the zoo or museum. It can also be smaller, because even smaller goals, like a new board game or two, are meaningful with children too small to use and understand money. Regardless, make sure everyone in the family contributes to the decision process, and speak with other adults in the family to make sure that you work out a budget.

Choose Increments for Each Family Member

The next step is to create a 52-week calendar. While it’s fun to start at the beginning of the year, these 52 weeks can happen whenever you all decide to begin. Each member of the family chooses to contribute a small and manageable amount at the beginning: for little children, this could be a penny or a nickel, and for the adults it could be one dollar. From there, each family member multiplies their savings contribution weekly. I learned about this idea from a client of mine, Peter Rusin of Health World Education.

If you start week 1 with $1, you would contribute $2 the second week, and $3 the third week. Over time, children may “feel the pinch,” but when they see that everyone in the family is also doing it, and remember the goal, they will be impressed with themselves for their accomplishment. This also teaches children to be more discerning in their spending habits, a major life skill for teens and young adults!

Make Savings a Fixture in Your Home

Start off with a parent-child craft project to create the savings box. This could be a plastic, see-through container so that the children can see money accumulate, or it could be a wooden “treasure chest” decorated with paint and stickers.

To make this fun for the kids we went to Michaels and bought a cute treasure chest. The kids decorated the box and wrote on it, “Feitlinger Family Fun Funds,” and each week we pull out the box and deposit into it. We also outline each year what we want to buy and talk about that as a weekly reminder. I have found that when we purchase that item it means so much more to the kids because they helped save for it.

Make sure to encourage the kids to depict their goal on it, like a vision board. If they are ever tempted not to save, they can see their drawings and collages and remember what they are working toward.

Show Children How “Windfalls” Can Add to Savings

One way to keep the excitement alive is to work together as a family to put windfall money toward the project. If the tax return is more than expected and can be spared, let the kids feed some of it in cash into the savings container. If you hold a yard sale or do some work on a neighbor’s house and make some extra cash, put it into the box. The kids will start to see how beneficial it is to “live” off what they make day-to-day and save any extra money for a rainy day.

What is most important is that your kids see you being great stewards of your own money and practicing the tough art of saving over time. The last step is to enjoy your chosen goal when it comes, and remind the kids that it was possible because of savings!

I’d love to hear from you and what you do to help teach your kids about money!