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It’s Not Too Early: 3 Ways to Teach Children About Saving Money

By Mario Gutierrez 

Have you ever heard someone say that children are like sponges, constantly absorbing new information and integrating it to their behavior? Several studies indicate that children start imitating our money habits and our emotions towards money as young as three years old!

As a parent of small kids and a financial counselor, I have always been on the lookout for ways to teach my children the value of money and the importance of saving. Today, to commemorate the 25th anniversary of Teach Your Children to Save Day, I would like to share some useful tips and resources to get you started in the quest to teach your children great money habits.

1. Start with the basics.

Talk to you children about basic concepts like what an essential expense is–a need, and what a discretionary expense is–a want. Collect a few household items and ask them to group them into needs and wants. Do this exercise a few times over the next few weeks to strengthen their understanding.

  • Tip: If you are into apps and games, you can check out World of Cents a free educational game for children five and up that teachers them the value of money in a fun and interactive way.
2. Talk to them about saving money.

Even if you are unable to save money right now, you can still highlight to your children the importance of putting money away for a raining day. Tell them that whenever adults get paid, a healthy thing to do is to save some of that money in case it’s needed for an emergency like a flat tire or a hospital bill. You could also mention that savings can come in handy if we choose to spend it on an upcoming trip or celebration. Don’t focus too much on the amount, but on the regular practice of putting money away.

3. Set up a family budget and include the kids in the planning.

If you can commit to a budget at this time, make it a family endeavor. List out all of you essential expenses and if there is money left over, decide what you will save it for. An emergency savings account is usually the first bucket. Afterwards, you can save some money for a vacation or just a fun weekend around town. You can also consider saving for long-term goals like retirement and college savings. Whatever it is, let your kids into the planning!

One final point to consider: when teaching your children about money, be careful not to frame money in a negative light, even if times are rough, as this may have lifelong implications for them. Remember, children also imitate with our emotions, so instead of saying, “We can’t buy that, we don’t have any money,” consider saying, “I am not buying that today because it’s not in our budget,” or “We are using this money to buy things we need at this time.” 

Still have questions?

NYLAG Financial Counselors can help you navigate your benefits and create a plan to secure a financially stable future.

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