The American Bankers Association partners with banks and schools to sponsor the Teach Children to Save program to instill the importance of saving money and to address the national deficiency of financial literacy. Parents can help educate their children at home, as well, so children grow up with principles and skills that allow them to be financially responsible adults.
Give Them Money to Manage
According to the Indiana Department of Financial Institutions, children need to have some money of their own to learn how to spend and save. Consider what expenses your child has on a typical weekly or monthly basis, such as for school lunches, for scouts or sports and for entertainment. You may wish to include extra for saving and charitable giving as well. When you give your child his allowance, provide detailed information about what expenses he must cover. If he spends it all on video games and runs out of lunch money, packing peanut butter and jelly himself for the rest of the week may encourage him to be more prudent. Likewise, he can learn to save up for something he really wants.
Provide a Good Example
Children learn by watching their parents, which is one reason you should strive to display financial responsibility. The U.S. Department of Health and Human Services suggests sharing personal details about earning and spending money. For instance, show your child utility bills or grocery receipts for the month. Explain how many hours you must work in order to pay one bill. If she is old enough, tell her how much the minimum wage is and ask her to calculate how many hours it would take for a person earning such a wage to cover those bills. Show her how important it is to have a cushion of savings in case of emergencies or even to splurge on something fun occasionally.
Make It Fun and Exciting
Saving money doesn't have to be boring or tedious. Finding creative ways to encourage your child will make him likelier to start saving and stick with it. The County of San Diego, California, advises parents to provide visuals that make saving more like a game. Provide a clear piggy bank so your child can see at a glance how much he has saved. Create a thermometer-style wall chart with small goals to inspire a child to reach an ultimate goal. Once the goal is reached, take your child to open his own savings account at your bank. You may even wish to match some of his savings. For instance, you might give him a quarter for each dollar he saves. Foster a healthy, positive attitude and it's likely your child will grow into a fiscally responsible adult.
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