Teaching Your Children About Saving

By:Debby Hohler, Director, Corporate Communications, Sallie Mae

You understand the value of saving. But what about your children? What’s the best way to encourage them to save—and make it fun at the same time?

For children who aren’t old enough to get an allowance, start with the basics. When they get money for their birthday or a holiday, you can help them understand what money is:

  • Give them different coins and see if they can identify each one and its value.
  • Get them a piggy bank and praise them when they put money in the bank.
  • Keep your own piggy bank to show that you save, too.
  • Make a game of going to the store—“How many quarters does this ball cost?”

One way to make things fun is to use Big Start (iPhone) (Android), a free downloadable app designed to help children up to age 6 learn about money. It features a read-along e-book and money-related games to entertain and teach. It also includes an interactive "What do you want to be when you grow up" section that lets you upload your child's picture into an avatar of an astronaut, farmer, vet, and other professions.

Some kids like to save all their money; others can't wait to spend it. Here's a trick for helping them see that a give-and-take approach is a winner. Take a paper plate, divide it into thirds, and have your children fill in the pie slices with drawings and pictures from magazines. Ask them:

  • What would you like to save for in the future (college, a car, a horse, etc.)?
  • Whom do you want to share the money with (e.g., a local charity, disaster relief)?
  • What would you like to spend the money on (a toy, a game, etc.)?

Then, take three jars and label them “Save,” “Share,” and “Spend.” Talk with your children about dividing their allowance into each jar. You can also make a bank "passbook" out of a notebook so they can record how much they have saved, shared, and spent.

And don’t forget to reward good saving behavior. If possible, match the amount they put into the jar labeled “savings” — kind of like a family 401(k). Matching the amount shows your commitment to your children’s future and provides an opportunity to discuss saving versus investing.

Can’t match the savings? Try non-monetary rewards—toys, stickers, trips to favorite places—to reward good saving behavior. The key is active participation and providing positive feedback whenever possible.

The save/share/spend strategy that’s outlined in Big Start (iPhone) (Android),  can also work for older children. But here the motivations for saving are more complex and the opportunities to grow the money are more plentiful.

  • Encourage working children to “pay themselves first” so a set percentage of each paycheck goes to savings.
  • Remind older children that cars, computers, and electronic devices occasionally need to be repaired—and that saving can prepare you for unexpected expenses.
  • Explain how stocks and mutual funds work and help older teens manage a small investment portfolio.
  • If your children are going to college, let them know how much of the cost you’ll expect them to pay from their savings.

By laying the groundwork for saving early, you can provide your children with a positive, life-long habit — one that can put them on the right path to a rewarding financial future.

The app is available for download on iPhone here and Android phones here.

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Tip of the Day

  • Written by Tammy G. Bruzon | February 2, 2018

    Start Small. Think Big. Start preparing for your future #retirement today when you open a #mySocialSecuity account: http://ow.ly/lqBE30gDgzn #ASW18

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