Three Ways to Teach Your Kids to Save Money

A smiling mom holds her smiling young daughter and a piggy bank on her lap.

(Image credit: Getty Images)

published 27 April 2023

In the era of FOMO, to save money is not considered “cool.” Younger generations are often more interested in charging their dream vacation or buying an expensive purse rather than saving for retirement — the mantra is “I’ll deal with this later.”

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This is alarming for people who are, like me, disciplined savers. I learned from an early age to shop from the sale rack, pay off my credit card monthly and save for big purchases.

Now that I’m a mom of two, how do I plan to instill this in my own kids as they are raised in a generation of instant gratification? In two key ways — start early and practice what I preach. This is especially important this month, as today (April 27) is National Teach Children to Save Day.

If you’re seeking how to raise disciplined savers as adults, here are three ways I’ve started with my own children and are easy to adopt with yours:

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1. Teach Them the Satisfaction of Delayed Gratification.

Kids are constantly shown what’s available for them to consume, from social media to commercials and the living advertisements in their friends. It seems that no matter your age, we are always getting hit up for something. And shopping trips can come to a head with kids’ demands sent into overdrive.

A tip our family uses now — before we go into Target or any store, we talk about how we are not buying them anything for fun. If they want something for themselves, they can come back with their own gift cards from a birthday or save their money to get it. My older son is starting to understand, but it’s not perfect, and my little one doesn’t get it all. We still leave most stores with a tantrum, but my husband and I are mostly committed to this strategy. (Hey, every once in a while, it’s fun to break the rules, right!?)

Another new thing we are trying to do is explain why we aren’t doing something that one of their friends is doing. When we hear “why can’t we go there or buy this?” we explain how it’s not in our budget or that if we want to do that, then we need to save for that activity.

If they are really serious about wanting this activity, we create a savings goal chart to show them how we are saving for it. We’ll have discussions about what other activity we’ll abstain from in order to create room in our budget. As the kids get older, we’ll offer them more options for chores so they can earn money and contribute to the savings plan themselves.

This will also help instill in kids the value of working for your money and how it doesn’t just appear. In the end, having healthy and fearless conversations about money really helps to explain that we are not just saying no to say no, there is a reason financially, and this ultimately ingrains in them a sense of saving and budgeting.

2. Have Them “Work for It.”

However you do it, make sure children work for the things that they want beyond what they’re given. I’ve heard it all — good behavior, chores, practicing their instrument, etc. Whatever it is you want your children to do, use it to engage in a money conversation.

A couple of years ago, my husband had a genius idea — start a side hustle recycling program at home. We have bins for different recycling items, and everyone pitches in. We have grandparents, neighbors, friends and, of course, our own personal things collected and stored until the monthly trip to the recycling collection place. The kids are expected to help sort things, load it in the truck and help at the recycling center to get their share of the money.

If they help, they get to keep a small amount of money for their piggy banks, they are “taxed” by Dad for “gas money,” and then the rest is being saved by us for their future cars when they one day turn 16. We talk about all of this with them so they understand what their hard work will one day help with — this is another example of delaying gratification.

Both my husband and I work, so we also talk about how we get a paycheck, pay bills, pay taxes and also save for our futures. If you don’t talk to kids about the practices you personally partake in, how will they ever know what constitutes a good financial habit?

3. Show Them How.

Talking to kids about saving isn’t enough — showing them how to save is another thing. One example is my nearly 8-year-old’s lunch money. I purposefully don’t give him exact change for school lunch. I tell him he can spend $1 on a treat (if he’s well-behaved) and that he should have some money left. Depending on the week, I give him options — sometimes I tell him to bring that money back to me or put it in his wallet to save or donate — and then I follow through and make sure he didn’t spend it. If he asks about getting special treats or toys, I’ll remind him to save his extra lunch money for it. When he finally gets it, I’ll ask him how long it took, and it makes that treat even sweeter.

It’s also important to start saving for college, and in addition to the college accounts that we fund, we also created UTMA accounts (Uniform Transfers to Minors Act), which are accounts created under a state's law to hold gifts or transfers that a minor has received, similar to a 529 account). We add birthday money or gifts from relatives for special occasions to these accounts.

Instead of letting the kids buy another toy, we instead tell them that we are going to put the money in the bank, invest it and save it for something special in the future. They will have access to this one day and will hopefully understand its importance and practice the habits we have been exhibiting their whole lives.

We also talk about future goals and hopes, like what they want to be or study when they get older, or what big trips they want to take. Asking them questions as simple as if they could have a nice house or a nice car can be a fun way to get them thinking about long-term goals but also making big financial choices.

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While there are many ways to help teach your children to save, these are some that have worked in our household. Being a parent is the hardest job in the world, and it’s difficult to make choices and use techniques designed to create good habits 20 years from now. But hopefully my examples help you create some good financial practices to teach your children how to save for now and in the future.

Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser located in Long Beach, California. Registration does not imply a certain level of skill or training. Additional information about HH, including our registration status, fees, and services can be found at www.halberthargrove.com. This blog is provided for informational purposes only and should not be construed as personalized investment advice. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. The information provided does not constitute any legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant.

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