Any suggestions on the best ways to teach young kids to save money?
My top six suggestions: Start early. Start small. Keep it simple. Make it fun. Set a goal. And reward your children's efforts. Here's practical advice on how to do all those things as your children grow:
Preschool through primary: The piggy-bank years
Kids this age think about money in very concrete terms, so make saving as hands-on as possible.
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Piggy banks are great as both teaching tools and fun toys. Nowadays they come in all sizes and shapes, from traditional pigs to soccer balls to talking ATMs. For banks with a twist, especially for children in primary grades, take at look at www.moonjar.com; www.msgen.com; www.prosperity4kids.com, or www.sharesavespend.com.
And for a fun lesson in saving, read It's a Habit, Sammy Rabbit! or listen to the book's companion CD (www.itsahabit.com).
Remember that kids this age don't have a long time frame. So saving for college, though a worthy goal, isn't always a realistic one when a week might as well be a lifetime.
But they can certainly save their birthday money for a trip to the dollar store, or tape a picture of their coveted item to their piggy bank so they don't lose sight of their goal.
Elementary through middle school: The allowance years
Kids this age have a more mature understanding of money. They know what it can buy and can plan farther into the future.
So they're prime candidates for getting an allowance. And requiring them to pay for certain purchases -- collectibles, entertainment, trips to the mall -- gives them an automatic incentive to save.
They can also divvy up their allowance into pockets of money for spending, saving, giving and even investing (like the piggy banks mentioned above).
If you don't want to take the trouble to parcel out your kids' allowance into pots, a simple alternative is to require them to save, say, a flat 10%.
Around age 8, kids are old enough to have a real bank account. But be careful to explain how the system works. Even at this age, banks can be a mystery to children, who are often horrified to see their money disappear.
For a good online introduction to saving, try KidsSave, a program that includes interactive tools that let youngsters set goals, track their progress and see how their money can grow over time ($29.95 with a 35-day free trial).
And you can always encourage kids to save by matching what they put aside -- your very own family 401(k).
Once your children have achieved their goal, let them spend the money and enjoy the payoff for their efforts. Saving may be spinach and spending dessert, but as my son once told me, "Saving can be dessert, too, if you save for something you want."
NEXT WEEK: Getting teens to save -- without nagging.
