Teaching kids to save money is important and difficult. From a young age they are exposed to marketing messages telling them to make wish lists, buy toys and products filled with sugar and high fructose corn syrup, and to spend money. There are very few, if any, messages about saving money and the rewards of delayed gratification. Delayed gratification is the way adulthood works. Your paycheck does not come every single day you work. Instead, you have a pay day and you get a cumulative sum of money for the hours you worked. Wouldn’t it be awesome if commercials actually tackled the issue of paychecks coming twice a month?
It has become essential for parents to teach children about saving money. One of the best teaching tools for a young child is the old-fashioned piggy bank. It’s a very easy saving tool.
The Two Piggy Bank Approach to Teaching Saving and Spending
Many parents buy a piggy bank for their child and show them how to save their money and then put their money in the bank. However, the concept of saving the money that goes into the piggy bank can be confusing and a difficult concept for kids to grasp. Purchase two piggy banks and you may help alleviate the confusion. Here is how it works:
One piggy is for saving.
One piggy is for spending.
Label those little piggies. Hang signs over their heads or place label stickers on them. Heck, a piece of masking tape with the words in Sharpie is as fancy as you need to be. Now when your child gets money, which could be allowance or birthday or chores, he/she can decide what to do with it. They can save the money or put it in their spending bank. A good rule of thumb is to have them divide the money. For example, they can put 60 percent into saving and spend 40 percent of it, or 70/30. It is easiest to do this if you give your child single dollar bills instead of larger bills.
Having two piggy banks teaches children that money has many purposes. It can be used for fun right now (instant gratification) and it can be set aside for later (delayed gratification). This is an essential lesson to learn at a young age! You are helping your child create good saving habits.
When you go to the store ask your child if taking some spending money is a good idea. Your child is then able to make independent decisions about what they do with his/her money which is again a powerful lesson.
Soon we will take a look at goal setting and how to work with children, even young ones, to set savings goals and achieve them.
For a more advanced version of teaching kids about money – add a “giving” or “donation” piggy bank to the mix so you can teach your child to be generous and to help others.
Get a copy of our printable Chore Chart to use at your house.
Teach your child to give to others.
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