Teaching children life lessons at a young age can be difficult, but starting early can solidify positive foundations and habits for their later years. April is Credit Union Youth Month and this is a great time to find ways to teach your children how to save money.

According to Balancing Everything, an average US family has a little over $40,000 in savings, which isn’t nearly enough to retire by the age of 65. Additionally, 14% of Americans have no retirement savings. Although a child might not contribute to a mortgage or car payment, there is still an opportunity for them to understand creating positive habits with finances now can give them an advantage later in life.

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Here are some steadfast ways to encourage your child to build these positive habits:

Begin with the Basics

The topic of finances can often feel extremely stressful and tedious, but it is very important to create a positive space for children to learn about this topic. Starting with the basics is a great way to begin. Saving, spending, budgeting, and setting goals are good topics to cover early on.  By starting early, they will have more time to develop these critical financial lessons as they grow older.

Even if your child does not know math or currency value yet, they can still understand the basic principles of finances. For example, it’s is important to educate them on the difference between a need versus a want and explain that giving up wants today can help them save for needs in the future – like trading candy now for a car later.

Help them Set Goals and Ways to Earn Them

Teaching your children the importance of working for what you want can help them understand the concept of earning income and create discipline in their purchases. This, in turn, can nurture continued financial goals.

How many times has a commercial come on for a cool, new toy and your child jumps up in excitement, begging for you to buy it for them? This is a great opportunity to set a savings goal with them. Helping your children understand the value of setting financial goals for themselves can translate into other areas of their life like academics, fitness, and lifestyle.

Be Consistent and Intentional

It’s important, as a parent, to be consistent and follow through to solidify good habits. Make finances an everyday conversation. Invite your child to your grocery shopping process and explain the importance of making a list, setting a budget, and then sticking to it as closely as possible. Have the discussion on how other areas can be impacted if those goals aren’t set and reached.

Allow your child to make their own list and budget for a shopping trip of their own. After, discuss the triumphs and opportunities and reward their efforts. This message will be something they remember into adulthood.

A Fun Exercise in Saving

Now the fun begins! This activity can work with your child even if they don’t understand currency. You can replace currency with candy and, as they continue to learn, you can advance to dollars and cents.

Each week, your child will have an allowance that you set ahead of time. This can be in dollars, cents, or even pieces of candy. During the week, they have the opportunity to earn more through things like chores, acts of kindness, or doing well in school. These things are income. During the same week, your children will have the choice to spend their money now or save for something big at the end of the month. They can choose a want and a need each month to create a goal for spending.

The goal of this game is to allow the children to make decisions with their money and then use each choice as an opportunity for discussion to learn. Sometimes, making mistakes can offer the most valuable lessons. The role of the parent is to keep track of each child and their saving and spending habits and offer a helping hand when a child struggles or validation when a child is succeeding. This activity allows room for children to make mistakes before they are older, when it can really matter.

Finances can be a scary thing to think about, but giving your child room to grow in this area at a young age can nurture a healthy relationship with money and savings.


AUTHOR: Rachel Caballero is community development manager at TruWest Credit UnionTruWest Credit Union is headquartered in Tempe, Arizona, and operates as a cooperative providing its members with a lifetime of quality financial services and a culture of caring for its members, employees and communities. TruWest is a strong and sound financial institution with more than 93,000 members and assets totaling more than $1.5 billion. TruWest® Credit Union has 12 branch locations – eight in metro Phoenix and four in Austin, Texas. For more information, visit truwest.org.