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What's a good way to get my child in the habit of saving?

First talk to your children about needs versus wants. Once children understand that needs come first and that sometimes we have to wait for the things we want, it gives them a foundation to see the value in saving. Consider these other tips for children of all ages:

For preschoolers

There are big lessons wrapped up in saving, including understanding the difference between needs versus wants, understanding that needs come first, and sometimes we have to wait for those things we want. Explain that you and your family need food, clothing, a place to live and transportation to get to work. Most everything else is a want. When you go shopping, point out the things that are needs and those that are wants.

You can teach delayed gratification – that you sometimes have to wait for those things you want – by using teachable moments, like when your child is standing in line for a turn on the swings, or looking forward to a birthday or holiday.

A common method to get children in the habit of saving is to use three jars or cans, one labeled “saving,” one for “spending,” and one for “giving.” Each time the child gets money, a little should go into each.

When your child sees a toy they want, don’t automatically say “no.” Have the child look at the price. Then, let them use the money in their spending jar, or save for it using their saving jar.

For middle schoolers

Encourage middle schoolers to save a dime for every dollar they receive. Help them start a savings account at the local bank, or credit union, or online. Then help them to set a savings goal. It could be the amount needed for a new gaming system, a bike, or car when they turn 16. Whatever they choose, it should be meaningful to them.

To reinforce their savings habit, go to the bank at least two to three times a year with your children to deposit their savings into their accounts, and look at how much bigger the balance is on each visit.

You might also consider a “matching plan” to help incentivize your child’s savings. For example, you could put in 25 cents for every dollar your child saves.

For high schoolers

Once teens reach their freshman and sophomore years, they may be starting to work part-time jobs, which mean more money to save – or more temptation to spend. Help them to focus on attaining their goals, rather than on restricting their spending. For example, many teens’ biggest goal might be saving for a car. Show them the math – how soon they could reach their goal if they saved a specific amount each paycheck or month.

You can also explain that the more they save for big ticket purchases like a car the more they can reduce the amount they have to finance and the amount of future income that would have to go to loans and payments. Look at online calculators to run different down payment and monthly payment scenarios.

For more money activities for your child, visit our Money As You Grow section.