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How to Explain Saving to Kids


Saving money is easier said than done. It’s a learned behavior, and something that many adults struggle with, regardless of their financial situation. Of course, what’s tricky for adults can be even trickier for kids. We recommend helping kids grasp the concept of saving money as early as possible, and for those of us who are no longer kids, it’s never too late to start saving — or learning. Here are three simple starting points to get the discussion going.

Emphasize the End Goal
It may be difficult for kids to grasp the concept of saving for its own sake. You might need to start with one simple objective, rather than trying to help them grasp the concept as a whole. Ask your kids what saving means to them and let their answers be your guide. When asked about what they might save for, choose a goal that is relatively easy to accomplish. A bit of candy? A matinee movie ticket? A treat at your local coffee shop? The list of possibilities is endless. Whatever you choose, make sure it’s something they can get excited about.

Get more guidance for explaining money to kids at Invest & Save.

Start Small
Help your child develop good saving habits early on by encouraging them to put small amounts of money aside, to start. This may be a challenge, as many kids are all about instant gratification. But setting achievable goals and giving them reasonable expectations will be key to their success. We recommend you set short-term goals for younger children and slightly longer-term goals for older children. This will help older children learn the importance of planning for larger purchases and will help them determine if more expensive items are worth the time and commitment to save. Those kinds of decisions can impact success well into adulthood.

Delayed Gratification Is a Goal in Itself
The act of choosing not to spend money when one has it in-hand is a pretty tall order, for adults as well as kids. Be patient with your kids and encourage them to be patient with the process. Remind them that little by little, they will get there. The younger they are, the more difficult it is to delay gratification. Keep this in mind when you set a timeframe for attaining their goal. For very young kids, just a few days of saving could be a great first lesson. For older kids, you can set timeframes that match their individual levels of maturity and patience.

Every savings practice is a good one. The sooner your kids can grasp the concept and put a savings plan into action, the better prepared they will be for financial success as adults. Shoot for having lots of conversations and giving them a good deal of practice while they are still developing healthy spending habits.