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As a parent, you’re responsible for teaching your kids important life lessons. You help them learn their ABCs, how to tie their shoes, and to look both ways before crossing the street. But do you teach them about saving money? Learning how to budget and save responsibly are key skills they’ll need to succeed later in life. In honor of Financial Literacy Month and National Credit Union Youth Month, here are six ways to cultivate smart savings habits as your child grows up.  

1. Be Open and Transparent

Gone are the days when money was a taboo topic. Talking to your kids about basic financial matters, household expenses, and your family’s savings goals should be as regular as talking about the weather.

Smart idea: While your kids are young, keep financial conversations simple and use age-appropriate language. Focus on the big concepts, like saving, budgeting, and goals, rather than talking about dollar amounts.

2. Introduce Budgeting Early On

Show your child how a budget helps you separate wants and needs, so you can be sure you have enough money for what’s important. Explain how you must first take care of your responsibilities, like housing and food, before you can spend any money on fun purchases. Showing how you make decisions to help you live within your means will show them how to do so later in life.  

Include your children in conversations about how any “extra” money should be allocated – like whether you should use it to buy a new TV, save it for an upcoming vacation, or take care of needed home repairs.

If your child is old enough, go through your budget with them and talk about how you set aside different amounts for different purposes. If you don’t already have a budget, it’s easy to set one up using a budgeting worksheet or My Money Manager, a free financial management tool available through our Online Teller.

Smart idea: Take your child grocery shopping. Give them their own, very short shopping list and a small budget (say, $10 or $20). Help them compare prices and make decisions about which items they can buy to stay within their budget.

3. Teach the Value of Saving

“Saving for the future” is an abstract concept that might be difficult for younger kids to grasp. Help your children understand that saving money for later helps them make sure they won’t run out and that regularly setting aside money helps them pay for things they can’t afford yet, like a video game or pricey toy.  

Smart idea: Money-based board games like CASHFLOW or The Game of Life provide a fun, hands-on demonstration. By conserving their game money, your child will discover that saving will help them cover expenses that arise later in the game (and in life).

4. Help Them See Their Progress

A great way to teach young kids the value of saving is by helping them watch their money grow – literally. Give them a clear jar or other see-through container to save their allowance and any other money they receive throughout the year. This is also a great way to introduce the concept of “paying yourself first” – which is a great habit at any age and will serve them well later in life.

Putting money in jars can also teach young kids how to budget. Instead of just one jar, use three clear containers marked Saving, Giving, and Spending. By dividing their allowance and gift money into these three categories, your child learns how to set priorities and give their savings specific purposes.  

Smart idea: As your children get older, you can take them to your local branch to make deposits in their youth savings account. Together, you can watch their savings grow by viewing their balance in online and mobile banking.

5. Set Savings Goals Together

As kids grow up, their tastes get more expensive. Maybe your teen wants designer shoes or the latest tech gadget. Help them figure out how long it will take to save enough money to make their desired purchase.

Smart idea: If your teen is saving for a larger, long-term goal, like their first car or college, you can motivate them to keep saving by offering to match their contributions to help them reach their goal faster.

6. Make the Connection Between Earning & Saving

Instilling a good work ethic is one of the most valuable – and rewarding – gifts you can give your children. Next time you’re at the store and your kid asks for a toy or treat that wasn’t on your list, tell them it’s not in your budget and ask them: Is this a need-to-have, or a nice-to-have? If it’s the latter, let them know they can earn the money to purchase it themselves by doing extra chores.

Smart idea: As your child gets older, encourage them to brainstorm different ways to earn money, and support them in their entrepreneurial endeavors. From the proverbial lemonade stand to walking dogs and mowing lawns, there are lots of ways they can earn money before they’re old enough to drive – and add to their savings account.

Give Your Child a Head Start

At American Heritage Credit Union, we believe that financial literacy is a must for all ages. That’s why we offer a variety of financial wellness resources to improve our members’ financial well-being, including activities designed to make financial education fun. And if you open a Little Patriots Account for your little one, we’ll even help with the opening deposit!