A Guide for Teaching Kids How to Save Money
Saving money is not easy to do no matter how old you are. On the other hand, spending money is something that is very easy to do! Everyone has things that they want and/or need that require money. You can buy only one or two toys and suddenly all of your money is gone. This is why it is very important to learn how to save your money. When you are young you might want to save money for fun things like special toys or video games. When you become an adult you need to save money to spend on things like rent for an apartment and gasoline for your car. There are many things in life that you will need to spend money on that you may not consider to be "fun" but are instead simply necessary. The following ideas will help you learn how to save money and also why saving money is so important.
Find an actual piggy bank or a clear jar. Every time you get money (such as an allowance or gift money) put it in your jar. It is very exciting to watch the jar fill up over time. Create a picture of something that you really want (such as a new Pokemon toy) and tape it to the outside of the jar. This will be a reminder to you of what you are saving your money to buy. You can even have several jars with different pictures (or goals) on each one. Some items will take you a long time to save enough money to buy while others will not take very long. These are called "short-term" and "long-term" goals.
Having a special savings chart to show your progress as you save helps to motivate you. The chart can be anything you want it to be. It could be shaped like a thermometer and you could start coloring at the bottom of it. Each time you add to your savings you color up toward your goal of the top of the thermometer. Another idea is to try to determine ahead of time approximately how many weeks it will take to save enough money to buy a specific item you want. Next you make a chart with the estimated number of weeks on it. Place a sticker in the box of each week that you add to your savings. For your chart you could even draw a picture of a cartoon character and start your coloring at the tip of its tail or at the character's feet.
Matching savings requires the help of your parents. Ask them if they would be willing to donate money to you as a reward for each time you add to your savings. They could "match" or donate the same amount that you add to your savings each time you add. If the amount you add to your savings is more than what your parents want to spend then they might be willing to give you half the amount you add each time. This is a great way for you and your parents to work together to help you achieve your goal.
There are traditional board games you can play that will help to teach you about money. Monopoly, for example, is a good way to learn about buying and selling properties, houses and hotels. In the game you might want to save your money in order to be able to afford a specific property or to afford to buy houses for a certain property you already own. There are also wonderful games online that will teach you about saving money. For example, the "PBS" website features an excellent savings game called "Mad Money." For this game you begin by choosing an item from several available ones that differ in price. After you have chosen your item you have 30 days to earn, save and spend money in order to eventually be able to buy the item you initially selected.
Interest-Earning Savings Accounts
When you open an interest-earning savings account at a bank, you actually "earn" money according to the amount of money in your account and the interest rate. This means that simply by having money in your savings account you earn more money that will be added to your account. This extra money is automatically added each month which means you don't have to do anything special in order for it to happen. For example, if you have $10.00 in your account and the interest rate is five percent, in one month you will earn an extra .50 cents. You now have $10.50 in your account. If you do not remove any money from it for the next month the five percent interest will be earned on the $10.50. This equals approximately .53 cents for that month. As you can see, even though the interest rate of five percent remains the same, as the amount of money in your account goes up so does the amount you earn on it. In other words, the more you save the more you earn.
Parent Savings Jar
Another great way to learn about saving money is having one or both of your parents use a clear savings jar to save money in as well as yourself. They could also draw a picture (or have you draw one for them) of something they want to save the money for. You can keep your jars next to each other so you can compare how high they are both filling with money over time. This demonstrates how important saving money is for everyone (even your parents). In addition, your parents are setting a good example for you to follow.
- Mad Money
- Money Management for Teens
- How to Save for Something Big
- 15 Ways to Teach Kids About Money
- Saving Give you Power
- Points for Life (PDF)
- Peter Pig's Money Counter and Money Metropolis
- Jumpstart's Reality Check
- H.I.P Pocket Change
- Igloo Shopping
- Saving Squad
- Fun to Save
- Money Games
- Shop 'til you Drop