Get Kids in the Habit of Saving Early, Not Late!

How do you teach kids to save money?

April 28, 2004 -- If advertisers can successfully target children from birth with spending messages, then parents, grandparents and educators can and should be doing the same with saving messages. I hate to disagree with many education experts who feel fourth grade, or ages 9 and 10, is an appropriate time to begin discussing money management with kids, but it is just too big of a head start to give corporations and businesses who are increasingly targeting this growing market.

Traditional thinking ignores the fact that today children begin establishing habits and a relationship with money around the age of four. Lets face it, ninety nine percent of that relationship has to do with spending and in all likelihood is the beginning of a lifetime of poor money habits.

Although personal finance authors may disagree on a variety of issues, one they all seem to agree on is that when you earn or receive money, the first thing you should do with it is put some away or pay yourself first. Can you imagine the impact on a childs life and their parents, if they are taught this time tested principle from an early age? Isnt it easy to picture educated, hard working, self sufficient, independent adults who own homes and businesses?

I know one of the great regrets of many adults is that they werent taught about saving as a child. In fact, its the main reason I started writing childrens financial books and music. Establishing good habits are essential to developing a healthy relationship with money. So how do parents, grandparents and educators help young children get in the habit of saving? Here are some suggestions:
1.Improve our own understanding of personal finance. Believe it or not, many adults dont understand the basics of personal finance or money. No matter how well intended, nothing can be more harmful and consequential for children than providing them with information that isnt correct. There is no shortage of myths when it comes to money, like it is good to get a large tax refund. So pick up a book on personal finance and get your familys finances in order. There are several excellent books on the market. Find one that speaks to you. A few of my favorites are: The Way to Wealth, Benjamin Franklin (hes pictured on the $100 bill for a reason); The Money Diet, Ginger Applegarth; Rich Dad, Poor Dad, Robert Kiyosaki, The Million Next Door; Dr. Thomas Stanley and Money Doesnt Grow On Trees, Neale Godfrey. Nothing will provide better results for children than setting a good, consistent example for them to follow.
2.Communicate, communicate, communicate. Talk to your kids about money. Not talking to kids about money is one of the biggest mistakes parents make.
3.Books and music. Two activities that can begin from birth are reading to children and exposing them to music. Both may help to cultivate an interest in and create an awareness of money. Naturally, I strongly recommend Its a Habit, Sammy Rabbit!, Will Sammy Ride the Worlds First Space Coaster? and Get in the Habit! the two books and music CD that my company has published ( Additionally, I suggest: Lucky the Golden Goose by John Wren; Alexander, Who Used to be Rich Last Sunday by Judith Viorst; Tops and Bottoms by Janet Stevens; The Giving Tree by Shel Silverstein; and The Trouble with Money by Jan Berenstain.
4.Coloring sheets and books. Visit your local credit union or bank and ask them if they have any coloring sheets and coloring books for kids. Many do, particularly credit unions.
5.Separate and count coins.
6.Piggy banks and saving jars. Get your child a piggy bank, or better yet create your own. If you are going to purchase one, my favorite is The Money Savvy Pig TM ( I prefer this bank to most for two reasons: (1) Its transparent. Seeing your money grow is a tremendous motivator for kids to continue to save; and (2) Contrary to the current trend of dividing banks into three compartments, its divided into four: save, invest, spend and donate. But better than purchasing one is to create and personalize your own.
7.Board games and cash registers. Monopoly (Junior), Moneywise Kids, Payday and Scan N Count Cash Register by KIDdesigns, Inc. are few good choices.
8.Wealth/goal journal and affirmations. Have your child create his or her own wealth journal. In the journal identify goals and draw or clip pictures of those goals. Divide goals in to short, mid and long term. Encourage your child to write about why the goals are meaningful to them. Create short, fun, repeatable slogans for your kids like: saving makes me strong; from every dollar, save a dime; change adds up; and money likes to grow and grow.
9.Read the Sunday paper and clip coupons. You might let your child share in the savings you get by using coupons. After all, who doesnt like receiving a bonus or reward.
11.Lists and shopping. Lists are a great planning, thinking and organizing tools. Make kids a part of any shopping expedition. Always start by writing a list and establishing a target budget before going to the store. Allow kids to comparison shop for items. Point out the difference in pricing between generic and name brands.
12.Allowance. Be consistent. Check out Allowance Magic, by David McCurrach (
13.Start an account. Take your child to the bank or credit union on a regular basis. Review banking and investment statements with your kids.
14.Purchase shares of stock or a mutual fund. Purchase a share or shares of stock of some of your childs favorite products. You can purchase stocks inexpensively at Sharebuilder ( Vanguard ( is a good source for mutual funds.

In summary, the key components to raising money smart kids are: setting a good example they can follow; communicating regularly with them; involving them in engaging money related activities; and getting them in the habit of saving early not late!

Sam X Renick is the author of two children financial books; has written and produced childrens music on the importance of saving money and is the founder of The Its a Habit! Company, Inc.,a socially conscience publishing firm dedicated to sharing the importance of saving money and other life empowering skills. Sam is also a periodic contributor to the KNX 1070 Business Hour in Los Angeles.

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