Financial literacy is a concept that every parent should introduce to their children at some point in their lives—the earlier, the better. Yet many parents avoid these kinds of conversations, thinking they’re not that important, the time isn’t right, or that their children will learn about money as they grow up—a kind of mindset you shouldn’t have.
Educating your child about money management early in life will set them into adulthood prepared, and teaching kids to save money is among the most valuable lessons you can share with them.
This article will explain the importance of helping your child build the necessary financial skillset and show you some actionable steps for teaching them about saving money.
Why You Should Teach Kids To Save Money
A 2022 LendingClub survey revealed that 64% of adult Americans were living paycheck-to-paycheck as they lacked saving skills and had little to no money set aside. To ensure your child doesn’t encounter these problems, teaching them the importance of saving and budgeting is crucial.
Implementing simple yet vital daily saving habits can make a lasting impact on your child’s future and ensure they step into adulthood financially independent.
Best Ways for Kids To Save Money
As your child starts earning money through allowance, chores, or gifts, more and more opportunities for saving will arise. Giving them valuable tips on effective saving tactics is one of the practical ways to help them develop healthy budgeting skills. Here are three simple ways for children to save money:
- Avoiding unnecessary purchases
- Keeping track of spending and making saving goals
- Using a savings jar
Avoiding Unnecessary Purchases
Teach your child to evaluate what they want to spend money on and to think about these purchases in the long run. A great exercise for this would be to think about why they’d like to purchase something. Give them a couple of seconds, minutes, hours, or days to consider if they really need the item or if it’s just a temporary rush of buying something. This extra time can help your child save up to hundreds of dollars per month.
Setting Saving Goals and Tracking Spending
An excellent exercise to improve kids’ money skills is to have them set a saving goal and track their spending accordingly. For example, if your child wants to buy a new bike that costs $150, they should set weekly saving goals, track their weekly saving and spending, and look for ways to minimize expenses until they reach this amount.
Using a Savings Jar
Another way for children to save money is by using savings jars to put away the cash they’ve earned through allowance or by doing chores. Labeling savings jars with what they want to get can also be useful because it will remind them what they’re saving for. Depending on what they’re collecting money for, they can label jars with “new bike,” “movie tickets,” “PlayStation 4,” and so on.
How To Teach Your Kids To Save Money
Kids’ money skills start developing around the ages of five and six. Introducing a piggy bank for savings or an extra buck for a chore well done is a great way to lay the foundation for learning how money works.
Here are some extra tips for effectively teaching your child to save money:
- Lead by example
- Leave room for mistakes
- Give incentives
- Involve your child in spending money
- Open a bank account for your child
Lead by Example
Children watch and learn from their parents, so you can inspire good saving habits by setting an example for your child with your own financial habits. Show them your budgeting and saving plans by discussing short- and long-term saving goals.
Teach your child that there’s more to money than just spending. You can do this by building an emergency fund, increasing your 401k, or saving for something together as a family.
Show them how you treat and use money, encouraging them to do the same when handling their savings.
Leave Room for Mistakes
Allowing your child to make an occasional mistake can be a valuable learning experience. Embracing their trials and errors and reflecting on the consequences that follow can make a lasting lesson. Next time your child wants to overspend their savings on toys or sweets, let them—this will help them learn that doing so will prolong the wait for what they were saving for in the long term.
As their role model, you shouldn’t be making these kinds of mistakes. However, if you do make a mistake in your money management, use it as another lesson for your child and make sure it doesn’t happen again.
Give Incentives
Another way to encourage your child to save is by offering to match their savings. For example, if your child wants to buy a new pair of sneakers that cost $80 and they start saving, you can offer to give them money to cover half of the cost. This approach can be inspiring for the child as it shows them that their efforts to save money are being noticed and appreciated.
Involve Your Child in Spending Money
As your child grows, make sure to give them insight into family money management and budgeting. Show them the following:
- How much money is spent per month
- How much money is saved per month
- How you saved the money
If your child is old enough (in their teens), involve them when discussing your family budget, paying bills, going grocery shopping, or purchasing something more expensive. You can even ask them to participate in some purchases.
All of this will help teach your child about family life expenses and prepare them for any financial challenges they may encounter in the future.
Open a Bank Account for Your Child
A great way to teach your kids to save money is by opening a savings account for them and showing them how to use it. This will directly show them how saving instead of spending helps grow their money over time by compounding interest. Teach them early on that money saved is money invested in their future.
As you’re exploring different ways to secure your child’s financial future, the idea of building credit might come into play. Having a strong credit profile will be crucial when your child starts thinking about getting a job, renting an apartment, buying a car, and similar high-cost purchases. That’s why you should help them start building their credit early on.
A common approach parents think of to help their children build credit is authorizing them to use their account or credit card. Although this is a valid option, it has several downsides, including the following:
- Your credit history will translate to your child, so you should have a good credit profile
- Your child will have full access to your account or credit card, allowing them to use it for not-so-smart purchases unless you teach them otherwise
- This option doesn’t help your child build their credit score—they only get your reflected credit history, which will get erased from their credit profile as soon as they’re removed as an authorized user
If you want to help your child build their credit profile without such complications, start using a credit building service like FreeKick and let your worries stay in the past.
Introduce Your Child to Credit Building With FreeKick
Powered by Austin Capital Bank, FreeKick is an FDIC-insured deposit account and a subscription service that provides credit building for children aged 13 to 25. FreeKick also offers identity monitoring and protection for up to two parents and six children aged 0 to 25.
Start Building Your Child’s Credit Early With FreeKick
A credit score is something that doesn’t usually cross the minds of young adults until they face a situation that calls for it. As parents are already aware of the importance of credit, they should be the ones taking the initiative to help their children establish it.
Good credit can save children over $200,000 throughout their adult lives, ensuring a financially safer and more stable future. Here’s how FreeKick can help you get your child there:
- Create an Account—Go to FreeKick.bank and pick a plan that suits your budget and preferences
- Set It and Forget It—Once you pick a plan, FreeKick will start building 12 months’ worth of credit history for your child that gets reported once they turn 18
- Keep Growing—After the initial 12 months, you can renew the subscription for another 12 months (up to 48 months) and keep building your child’s credit profile, or you can close the account without any penalties and get 100% of your deposit back
Enjoy Peace of Mind With FreeKick’s Identity Monitoring and Protection
While teaching children to save money and giving them other financial lessons is important, the safety of their credit profile shouldn’t be overlooked either. Identity theft has become a growing concern in the U.S., especially with minors whose clean credit profiles make them the top targets for identity criminals. In fact, statistics show that one child falls victim to synthetic identity fraud every 30 seconds.
To keep your family’s financial and personal information protected, FreeKick offers identity protection for up to two adult parents and six children aged 0 to 25. Take a look at the services it offers:
| Identity Protection Services for Adult Children and Parents | Identity Protection Services for Minor Children |
| Credit profile monitoring SSN monitoring Dark web monitoring for personal information Up to $1 million identity theft insurance Full-service white-glove concierge credit restoration Lost wallet protection Court records monitoring Change of address monitoring Non-credit (Payday) loan monitoring Free FICO® Score monthly FICO® Score factors Experian credit report monthly | Credit profile monitoring SSN monitoring Dark web monitoring for children’s personal information Up to $1 million identity theft insurance Full-service white-glove concierge credit restoration Sex offender monitoring—based on sponsor parent’s address |
FreeKick Pricing
FreeKick has two different pricing options to suit any budget. Both plans come with credit building for up to six children and identity protection for up to two parents and six children, and the deposits are FDIC-insured up to $250,000.
You can find more information about the plans in the table below:
| FDIC-Insured Deposit | Annual Fee |
| $3,000 | $0(Free) |
| No deposit | $149 |
Secure a stable and protected financial future for your child—create your FreeKick account in minutes.
