Tips for Teaching Children About Money and Saving

Teaching children about money and the importance of saving is a valuable life lesson that can set them up for financial success in the future. By introducing these concepts at an early age, parents and caregivers can help children develop a healthy understanding of money management, the value of saving, and the benefits of making thoughtful spending decisions. In this blog post, Whiz Kidz Craigieburn shares practical tips for teaching children about money and saving, ensuring they build a strong foundation for financial literacy as they grow.

1. Start with the Basics: Understanding Money

Before children can learn about saving, it’s important for them to understand what money is and how it works. Begin by introducing the concept of money as a tool used to buy things we need and want.

How to Introduce Money:

Play-Based Learning: Use play money and toy cash registers to create a pretend store at home. Let your child play the role of both the shopkeeper and the customer, helping them learn about money exchange in a fun and engaging way.
Counting Coins: Introduce your child to different coins and notes. Teach them to recognise the various denominations and practice counting them. This not only helps with money recognition but also reinforces basic math skills.
Explain Where Money Comes From: Help your child understand that money is earned by working. Talk about your job or other ways people earn money, and explain that we use the money we earn to buy things we need, such as food, clothes, and toys.

2. Introduce the Concept of Saving

Once your child understands what money is, you can begin to introduce the concept of saving. Explain that saving means putting money aside instead of spending it all right away, so you can buy something bigger or more special in the future.

How to Teach Saving:

Use a Piggy Bank: Give your child a piggy bank or a jar where they can deposit their coins. Encourage them to save a portion of any money they receive, whether it’s from an allowance, a gift, or earnings from chores. Seeing the money accumulate over time can be a powerful visual incentive.
Set Savings Goals: Help your child set a savings goal, such as saving for a new toy, book, or outing. Break down the goal into smaller, achievable steps, and track their progress together. This teaches them the value of delayed gratification and the satisfaction of reaching a goal.
Matching Contributions: Consider matching a percentage of the money your child saves. For example, for every dollar they save, you could contribute an additional 50 cents. This not only encourages saving but also teaches the concept of interest and how money can grow over time.

3. Teach Smart Spending Habits

Teaching children about smart spending is just as important as teaching them about saving. Help your child learn to make thoughtful decisions about how they use their money.

How to Encourage Thoughtful Spending:

Discuss Needs vs. Wants: Talk to your child about the difference between needs (essential items like food and clothing) and wants (things that are nice to have but not necessary). Encourage them to think carefully about whether a purchase is something they really need or just something they want.
Comparison Shopping: Introduce your child to the concept of comparison shopping. When they want to buy something, help them look at different options and compare prices. This teaches them to be savvy consumers and to look for the best value.
Involve Them in Family Purchases: Involve your child in everyday shopping decisions, such as choosing groceries or planning a family outing within a budget. This hands-on experience helps them understand how to make choices based on cost, quality, and necessity.

4. Introduce the Concept of Budgeting

Budgeting is a key skill for managing money effectively. Even young children can begin to understand the basics of budgeting by learning how to allocate their money for different purposes.

How to Teach Budgeting:

Simple Budgeting Plan: Help your child create a simple budgeting plan. For example, they could divide their money into three categories: saving, spending, and giving. This teaches them to allocate money for different purposes and introduces the idea of charitable giving.
Tracking Spending: Encourage your child to keep track of their spending by writing down what they spend their money on. This helps them see where their money goes and can lead to discussions about whether their spending aligns with their goals.
Monthly Allowance: If your child receives an allowance, use it as an opportunity to teach budgeting. Help them plan how much to save, how much to spend, and how much to set aside for special occasions or larger purchases.

5. Encourage Long-Term Saving and Investment

As children grow older, you can introduce more advanced concepts like long-term saving and investment. Teaching them about these topics early on can help them develop a mindset geared towards financial planning and security.

How to Introduce Long-Term Saving:

Savings Account: Consider opening a savings account for your child at a bank. Explain how the account works and show them how their money can grow over time with interest. Take them to the bank to deposit their savings, giving them a sense of responsibility and ownership.
Talk About Investments: Introduce the concept of investments by explaining how people can buy things like stocks, bonds, or property to help their money grow over time. You can use simple examples or even play investment-themed games to make the concept more relatable.
Set a Long-Term Goal: Help your child set a long-term savings goal, such as saving for a trip, a special gift, or even future education expenses. Encourage them to think about how they can reach that goal over time through consistent saving and smart financial decisions.

6. Lead by Example

Children learn a lot by observing the adults around them. Demonstrating good financial habits yourself is one of the most effective ways to teach your child about money.

How to Model Good Financial Behaviour:

Discuss Your Financial Decisions: Share age-appropriate information about your financial decisions with your child. For example, explain why you’re saving for a specific goal or how you budget for monthly expenses.
Show Responsible Spending: Be mindful of your own spending habits, and demonstrate how you make thoughtful purchasing decisions. Show your child that it’s okay to say no to unnecessary purchases and that saving for something special is worth the wait.
Involve Them in Family Budgeting: Include your child in discussions about the family budget, such as planning for holidays or saving for a big purchase. This gives them a real-world context for understanding how budgeting works.

Conclusion

Teaching children about money and saving is an essential part of their education and will serve them well throughout their lives. By introducing concepts like saving, budgeting, and smart spending at an early age, you can help your child develop a healthy relationship with money and build the skills they need to manage their finances effectively in the future.

At Whiz Kidz Craigieburn, we incorporate lessons on money and saving into our curriculum through play-based learning and hands-on activities. We believe that financial literacy is a key component of early education and are committed to helping children develop the knowledge and skills they need to navigate the world of money with confidence.

We encourage parents to join us in these efforts by reinforcing these lessons at home and creating opportunities for children to practise managing their money in real-life situations. Together, we can empower the next generation to be financially savvy, responsible, and prepared for the future.