7 Expert-Backed Tips on Teaching Kids About Saving Money

teaching kids about saving money

Discussing finances with young individuals isn’t always an enjoyable subject. However, acknowledging the importance of addressing money matters, especially the concept of saving, which is crucial for developing essential life skills. This challenge isn’t exclusive to adults; even they grapple with it, resorting to retail therapy as a coping mechanism for life’s daily stresses—ultimately leading to significant accumulations of bills.

Regrettably, a mere 25% of Filipinos possess financial literacy, as revealed by Banko Sentral ng Pilipinas (BSP). Moreover, educational institutions often fall short of providing adequate exposure to financial education for the younger generation.

Despite these challenges, imparting knowledge about saving money to children is feasible with the right guidance and tools, regardless of whether you are a parent, guardian, or relative. This article will guide you through seven expert-endorsed tips for teaching kids about financial matters.


  1. Make it fun
  2. Set saving goals
  3. Involve them in budgeting
  4. Open a bank account together
  5. Reward progress, not spendthrift habits
  6. Let them manage their own money
  7. Lead by example — let kids see you save, too

1. Make it fun

Transform the act of saving money into an enjoyable experience by turning it into a game. Encourage your children to save by using piggy banks shaped like their favorite characters or animals.

Every penny they save becomes a token in this exciting game of financial education. This creates excitement around saving and makes the concept tangible and easy to understand.

According to financial literacy expert Beth Kobliner, author of Make Your Kid a Money Genius (Even If You’re Not), making saving fun for kids is critical. Games and challenges encouraging saving can instill a sense of achievement in kids. It makes the whole learning process fun and exciting.

2. Set saving goals

Setting financial goals is a great way to motivate kids to save. Help them visualize what they are saving for, whether it’s a new toy, video game, or even a much-awaited trip to Disneyland. This tangibility inspires them to save more diligently.

Dr. David Anderson, a psychologist specializing in child and adolescent development at Child Mind Institute, emphasizes the benefits of this approach. He also advises parents to involve kids when in their second or third grade — when they already understand basic math.

Children who have a clear goal in mind are more driven to save. Seeing their savings grow can be a powerful motivator. Plus, allowing them to set savings goals fosters a sense of responsibility. It helps them be more mindful of how they spend their money.

3. Involve them in budgeting

Allowing children to have a say in how they spend their allowance can be a powerful tool in teaching them the value of money. This type of hands-on experience can impart a deeper understanding of the concept of budgeting.

Children learn that every peso spent on one thing is a peso that can’t be spent on something else, teaching them to make judicious decisions about spending and saving.
Dr. Lewis Mandell, a financial literacy expert and Professor Emeritus at SUNY Buffalo, emphasizes the importance of this approach. Involving kids in budgeting fosters their money understanding and promotes responsible financial habits.

This aligns with Dr. Mandell’s belief that experience is the best teacher. By managing their own money, children gain first-hand budgeting experience, understand financial trade-offs, and learn from the consequences of their decisions.

4. Open a bank account together

Introducing kids to the concept of banking can be a formidable step in their financial education. By opening a bank account together, children can learn firsthand how money can grow over time, nurturing their understanding of interest rates and the power of saving.

While making regular deposits, they can observe the increment in their account balance, thus imparting a practical lesson on the impact of saving money.

Renowned personal finance expert Dave Ramsey suggests the valuable lessons of reconciling bank statements and the importance of responsible spending, saving, and giving. He emphasizes parents’ role in teaching children about money and guiding them to become successful adults.

5. Reward progress, not spendthrift habits

Rewarding children for their savings efforts, regardless of the amount, can boost motivation and foster responsible financial behavior. It highlights the value of effort and the habit of saving and celebrates every victory, no matter how small.

The CDC advises using rewards to boost self-esteem and enhance the parent-child relationship. These rewards can be given immediately after desired behavior and may include material or social incentives, like extra time with parents or engaging in special activities.

Pediatric psychologist Kate Eshleman, PsyD, suggests using stickers for younger children and tokens for older children. These tokens can later be exchanged for more substantial rewards, motivating kids to accomplish specific goals and behaviors.

6. Let them manage their own money

Teaching children good money management habits can be accomplished by assigning each family member a personal allowance, whether it’s associated with chores or not. Having the liberty to manage their own money is a stepping stone to being responsible in money matters.

Doing chores can have multiple benefits for children, including higher self-esteem, responsibility, and the ability to handle challenges. These skills can lead to success in school, work, and relationships.

Now, when it comes to money management, the Utah State University Extension recommends giving personal allowances to all family members, regardless of chores. Positive Parenting Solutions corroborated with this idea and suggests that while allowances are great for financial responsibility, they shouldn’t be tied to household duties to avoid negative lessons.

7. Lead by example — let kids see you save, too

Teaching kids about money management involves leading by example and emphasizing the importance of saving. Research shows that children learn financial behaviors from observing their parents. For instance, parents with investment experience are more likely to teach their kids about investing and set up custodial accounts.

According to the APA, involving kids in a family’s financial plan helps them feel empowered. Joint decision-making about spending and saving sets a positive example.

A study from Brigham Young University (BYU) found that children who learn money management behavior from their parents are more likely to develop healthy financial habits. Thus, parents should model good financial behavior to inspire kids. You must walk the talk before expecting your kids to save money.

Final thoughts

Teaching kids about saving money isn’t a one-time event. For parents, it’s a lifelong, day-to-day encounter and conversation. In the Filipino culture, it’s nerve-wracking to even openly discuss money with family members, so imagine the huge barrier when we take this to the level of innocent minds.

But it’s possible. If you’re considering teaching your children at a young age, you’re one step closer to planting seeds in their young minds, and hopefully, they will carry over the fundamentals until adulthood.

How have you tackled the topic of money management with your kids? Do you have any unique strategies that have worked well? And more importantly, how can we further improve our children’s understanding of money?

We’d love to hear from you. Your experiences and ideas could be invaluable to other parents navigating this matter.