Even at an early age, toddlers can begin to learn about the value of money with games where they trade currency for goods (like playing pretend market games). However, once they start to recognize and differentiate money, around the age of 4-5, you can start your lessons in earnest. Here are several easy ways to teach kids about saving at different ages.
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1. Play With Fake Money
Toddlers are more likely to put coins in their mouth than spend them, so safety demands faux money. But even at the age of three you can start to introduce the basic concept of trading one thing for another.
2. Skip the Piggy Bank
By the age of 4-5, it’s safe to give children real money – and a place to put it. Piggy banks are cool, but a clear mason jar lets kids see their money accumulating over time, which is a great visual reinforcement of the benefits of saving.
3. Spend a Little, Save a Little
When kids get money for birthdays or holidays, make them save a portion and allow them to spend the rest. Show the benefits of saving by socking money away to purchase a bigger toy.
4. Make a Goal Chart
Suppose your child wants an expensive toy. Make a thermometer chart to track the savings. Even kindergarteners understand this simple, visual tool.
5. Lead By Example
Make a point of taking your kids to the bank with you when you put money into your savings account. It’s more work than doing it online, but it makes a powerful impression.
6. Start Giving Allowance
With motor skills developing nicely by age five or six, you can start having kids help with household chores and giving them an allowance. At this point you can take your child to the bank to open a savings account, complete with a ledger. This is also a good way to practice basic math like addition and subtraction.
7. Match Savings
At age seven or eight, your child is starting to understand more complex math, so you can introduce the concept of monetary growth. Whatever your child earns from chores or gets from gifts, offer to match what he/she puts into savings and discuss how it increases growth.
8. Allow for Mistakes
Even young children understand consequences, and by second or third grade you should start letting yours make basic monetary decisions. Allow your kid to blow his money on small items so that he can learn a lesson when he realizes the more expensive item he was saving for is now beyond his reach. This can be a powerful lesson.
9. Highlight the Advantages
Plan a vacation and explain to elementary-age kids how you were able to do it with money from your savings.
10. Explain Value
By fourth and fifth grade, your kids are ready to learn more complex lessons about monetary value, so have them help you clip coupons and comparison shop (by purchasing store versus generic brands to see the difference in price and value) so they can start to understand the value of money versus goods and see how to save even when they spend.