Teaching Children to Save Money

Teaching children to save money at a young age is important. There are various ways to go about it, but it is a life lesson that they will appreciate learning some day. You can start by purchasing a bank for your child’s room. Each time your child receives allowance, money for doing extra chores, or money as a gift, encourage your child to put a certain percentage in the bank.

When the bank is full, have your child help you count the money. He or she will be very excited by seeing all the money that has been saved. Your son or daughter may even decide to start saving a larger percentage.

If the amount saved is enough, use that money to open a savings account or to buy a savings bond for your child. Explain how each one works, and ask your youngster which option he or she would rather pursue.

Explain how interest is works and how much money will be earned in one year at the current rate. Also, note how much will be earned in ten years, the amount of time it generally takes a savings bond to mature. When your child realizes that he or she could double the money in ten years time, by buying bonds instead of using a standard savings account, the choice should be obvious.

Your child might balk at the idea of not being able to touch his or her own money, but explain that savings is not there to spend. Also, tell your child that once a bond has matured, he or she can cash it in and reinvest it in larger bonds.

Your child may opt to put some of the money into a savings account and use the rest to purchase bonds. That’s fine. It is a good idea to allow your child some control over his or her own money. Your children will learn valuable lessons from the experience.