When it comes to teaching kids about saving money, you can never start too early. Parents can put kids on a good financial path by following these simple tips from American Bank & Trust.

Whitney McDonald, Personal Banker for American Bank & Trust says, “Starting to save early sets you up on the right track for your adult years. Life happens. Having a savings account helps with things that happen that are out of your control.”


Lead by example

We’ve all had some version of this conversation with our children: “Where did you learn that word?” And the answer is often times, “From you.” It’s no different with spending. Kids are extremely observant.


Trips to the grocery store, hardware story or a restaurant are all teachable moments. If you’re using debit or credit cards, it’s very important to explain how they work. Otherwise, kids learn early they can just “put it on a card.”


Better to give your child a small amount of cash – say three dollars. Then challenge them with how they’re going to help spend it at the store. Is that something on our list? How many of these can we get?


If you are prone to impulse purchases, a child will be prone to them too. If you talk about how you spend the money you have, you’re child will think about it too. These simple activities help children understand value and saving.


There are also fun online games specifically designed for children by educators.


Go for the clear jars

Piggy banks are cool. But you know what’s really cool when you’re a kid? Seeing your money and watching it grow. Having a clear jar incentivizes kids to save and it’s rewarding to watch it fill up.


“Save your pennies!” says McDonald. “Every penny counts and over a course of 6 months to a year that could mean a nice little deposit into your bank account.”


It also teaches opportunity cost. For example, “Buying this bigger toy today, means no smaller treats or items next week.” Remember to let your child make the money exchange at their time of purchase. There’s something very tangible about handing over money. It’s rewarding to get your purchase, but you can also see your jar is a bit lighter. Another fun idea is to label a few different jars. You could do any combination:

  • Spending
  • Saving
  • Sharing
  • Treats
  • School


Doing this will help them learn budgeting, bills and responsibility as they grow up. You can also enroll your child in American Bank & Trust’s Save Your Change program.



Forget about the word allowance

Allowance is kind of a bad word to begin with. It implies you’ll allow a certain amount of money to your children just for being in your house. Better to use the word earnings or earned.


If a reasonable amount of money is earned by standard household chores, cleaning room, etc, your child not only learns the value of work. They also learn that money is not automatic.


It’s a shift of thinking from a reward.  When it’s earned, it means it doesn’t even exist unless the task is done, sort of like a commission.


Teach compound interest

Compound interest is one of the greatest things about saving early. As your children get a little older, explain to them how interest rates work.


Knowing that money multiplies over time is highly motivating. American Bank & Trust can help too with a number of our online calculators. Use them to show examples to your children.


Want to know more about this topic? 

Subscribe to our newsletter today!

Share This