Most children enjoy spending money, not saving it. To be successful later in life, they need to learn how to spend responsibly, saving as much money as possible. When teaching a child this concept, the behavior is sometimes exaggerated in the beginning until the child gets a grasp of the concept. The lesson learned is something youngsters can carry with them for a lifetime.
Step 1: Make a matching contribution for whatever the child saves. In the beginning, this match may be 100 percent, tapering off to 50 or 25 percent when the child gets older.
Step 2: Open a joint savings or holiday club bank account. Encourage the child to deposit money earned through chores, neighborhood jobs, and an allowance. Children will enjoy tracking the deposits and interest earned on the account.
Step 3: Assist with goal setting. If children want to save money for a new gaming system or expensive toy, set up a tracking system. Identify the required amount of savings on a visual like a drawing of a thermometer or chart. Each time they save, update the drawing to reflect their progress.
Step 4: Provide non-monetary rewards for savings. Give children stickers, a special trip, or toys to reward them for saving money.
Step 5: Develop a wish list. Let children write down the items they are saving for and prioritize the list. Add pictures so children get a visual reminder of what they are trying to achieve.
Step 6: Spending is part of the process so help children spend money on a small item. Allow children to pick an item from the wish list or make another small purchase.
Step 7: Set a good example by saving money in front of children. Take them on a trip to the bank when you are making a deposit and keep a piggy bank at home. Tell children what you are saving for, such as a new appliance or electronic item. Children will imitate your good savings habits.