Teach Children to Save

Teaching children about money early on will help them to develop good spending habits, resist impulse buys, and become more financially independent as they get older.

If children are old enough to ask for something like candy, a toy, or a bike, they are old enough to start learning financial lessons. 

Things that can be done with children to give them a lasting effect on their ability to better manage finances include having open conversations about money, shopping on a budget, reading about money, and playing money games.

Here are some tips to help teach children about money: 

  • Discuss Needs verses Wants - The first step in teaching children the value of saving is to help them distinguish between wants and needs. Explain that needs include things that are needed to survive - water, food, shelter, and clothing, and wants are things that are not necessary for survival. You can use your own budget as an example to illustrate how needs should come before wants in terms of spending.
  • Let children Earn Their Own Money - If you want your children to become savers, allowing them to earn and save money provides them with the opportunity to learn how to use it. When you offer allowances in exchange for chores, they are also learning the value of hard work.
  • Set Savings Goals - To children, being told to save,  without explaining why, may seem pointless. Helping children define a savings goal can be a better way to get them motivated. If they know what it is they want to save for, help them break down their goals into manageable bites. If they want to buy a $50 video game, for example, and they get a $10 allowance each week, help them figure out how long it will take to reach that goal, based on their savings rate.
  • Let Them Make Mistakes - Part of putting children in control of their own money is letting them learn from their errors. It is tempting to step in and steer children away from a potentially costly mistake, but it may be better to use that mistake as a teachable moment. In that way, they will know in the future what not to do with their money.

  • Act as Their Creditor - One of the basic principals of saving is to not live beyond your means. If your children have something they want to buy and is being impatient about saving for it, becoming a creditor can help to teach a valuable lesson about saving. Say your child wants to purchase something that costs $100, you could “lend” the money and require payment from the allowance you provide, with interest. The lesson you want to teach is that saving may mean delaying gratification longer, but the item you want to buy will end up costing less if you wait.

  • Talk About Money - If you want children to learn about saving, it must be an ongoing discussion. Whether you schedule a regular weekly check-in to talk about money or make money chats part of your daily routine, the key is to keep the conversation going. Another tactic is to break down children's money into three categories: saving, spending, and donating.

  • Set a Good Example - Talk to your children and have age-appropriate conversations about how money is earned and where money can go towards, such as the house, phone, cable, utilities, etc. If you want your children to become savers, being one yourself can help. Getting your emergency fund in shape or simply increasing your 401(k) plan contributions are all steps that you can take to encourage saving as a family activity. You could also decide to save for something together, such as a family vacation.

  • Provide a Place to Save - Open a Savings Account - Once your children have a savings goal in mind, they will need a place to stash their cash. For younger children, this may be a piggy bank, but if they are a little older, you may want to set them up with their own savings account at a bank. That way, they can see how their savings are adding up and how much progress they are making toward their goal. 
If you make saving a regular part of your child's routine, it can lay the foundation for a bright financial future. 
Please contact a Banker during normal business hours or email customerservices@bankoflakemills.com for more information on opening a Bank of Lake Mills Savings Account for your child. 


Consumer Financial Protection Bureau (consumerfinance.gov) - Money as You Grow has tips and activities to help children with money skills, habits, and attitudes grow. 

Federal Deposit Insurance Corporation (fdic.gov) - The Money Smart series consists of four free curriculum products. Each age-appropriate curriculum includes lesson plans for educators along with guides for parents and caregivers. 

The United States Mint (usmint.gov) - H.I.P. Pocket Change Kids Site has free games and activities for children. From math games to coin scavenger hunts, you can find all sorts of smart money conversation starts.