It is never too early to teach children or grandchildren about saving money. Starting as early as preschool, even the youngest child can learn the basics of saving money. In addition, it sets them up for financial success as an adult.
Preschool and Kindergarten
During these formative years, setting the right example for a child or grandchild can be a profound experience. Instead of paying with plastic every time, try using cash. Let them hand it over to the cashier and take a quick moment to talk about how groceries, clothes, dog grooming, and other ordinary things cost money.
Encourage saving with a clear jar so they can see their savings literally growing. Spend time counting their savings so that they can understand the more money added to the jar, the more savings they have. Make a big deal about how last week they had a dollar, but this week after the tooth fairy visited, they now have two dollars.
Elementary and Middle School
The best lessons are learned by actually doing instead of lecturing. When going to the store, encourage them to take a few dollars out of their savings. If they want a certain toy, candy or video game, allow them to determine if they have enough money for their wanted items. If not, have them choose which one they want the most (opportunity cost). This lesson not only shows them that items are not free and that there is a limit (budget) to what they can purchase with their money, but that sometimes they have to continue to save until they have enough money to purchase the item.
Instead of giving an allowance and being faced with how much, when to give, and for what chores, give a commission based on the chores they do around the home. For example, they can earn a dollar for taking out the trash all week, but they can also earn five dollars for mowing the grass or pulling weeds. This is a great technique to teach children that money is not free and that the harder they work, the more money they earn, and the faster their savings will grow.
Giving to others is not only a great habit to get into, but also a way to build empathy for their fellow man. Allow them to pick a charity or institution that they wish to help. Over time, by giving, they can begin to understand that this selfless act not only affects the receivers, but the giver as well.
Finally, as a parent or grandparent of a young child, teaching them early about the importance of saving can lead to additional talks with teenagers about saving for college, impulse buying, and other lessons that adults face from day to day. Giving them the power of economic knowledge will help them as they enter adulthood and set them up for a bright future.