Teaching kids about the importance of saving money

Look, I’ma be honest: I’m probably not the right person to come to for financial advice. So this is really more of a we’re-in-this-together kind of post, where I’m learning right alongside you and doing my best to teach my kids about the importance of saving money.

Because they haven’t exactly had the most frugal examples in my husband and me.

We are spenders. Heck, sometimes we are big spenders. But as I’ve transitioned over the years from full-time working mom at a big organization where biweekly paycheques are de rigueur to full-time blogger with paycheques that come in fits and spurts, the irregularity of my income has forced me to do things like budget and save.

And I shouldn’t be learning about those things in my mid-40s.

My parents (who are, incidentally, the most amazing people on the planet) coddled us too much, shielding us from the sometimes-harsh realities of money. Although they are the very definition of savers, they never taught my brother and me a thing about the importance of saving money.

All while working middle-class, no-frills 9-to-5 jobs, my parents managed to pay bills on time, buy a series of homes during an era of double-digit mortgage interest rates, get us trendy clothes and eventually send us both to university on the Mom & Dad Scholarship Fund.

They’re now retired and sitting pretty. And they did it all making less than half of our current household income.

I wish along the way they’d shown me how. Or made me value saving money more. Instead, I was handed money when I wanted it. I was no stranger to being given $5 here and there in my teens to go to the movies, and my dad would often slyly slip me a wad of $20s during university visits.

I knew the value of a dollar, because I worked from the time I was 14 years old. But it was all fun money. I never needed to buy necessities or contribute to chores around the house to earn my keep.

That’s a real problem, and it’s not the way I want to raise my own kids.

Not that I’m doing mine any favours, because — so far — I’ve done a pretty terrible job of teaching them how to save. Don’t get me wrong…they have oodles of money in their respective bank accounts for their future education, but that’s because I’ve swiftly taken any cash my kids have been given since birth (birthdays, Christmases, etc.) directly to the bank before they even have a chance to see what’s gone missing.

Is this teaching my kids the importance of saving money? I think not. Because they’ve had no part in it. No skin in the game.

Figuring out how to earn money as a kid isn’t as important as learning how to save it.

How to earn money as a kid

If your kids want to save money, first they’ve got to make some. It’s remarkably easy for kids to make money and it can start early. I’m not advocating child labour or anything, but rather than just giving your kid money for treats, books and stickers (and the other 418 things they’ll ask for in a given day), you can consider asking them to earn it.

Now, the jury is still out for me on allowance. A big part of me believes that kids should help their parents around the house because, you know, they get to live and eat there for free. But I know allowance can make a lot of sense for people who are trying to teach their kids about money management and the importance of saving money.

I don’t think there’s any harm in asking your kids to do a little extra around the house and paying them for it.

But they can also cut neighbours’ lawns, shovel driveways, wash cars, take a local dog for a walk, have a bake sale, and (when they hit 12) start babysitting to make some dough. Paper routes might not be what they used to be unless you’re delivering big-city papers, but when I was young it was an awesome way to earn money.

Kids can also set up lemonade stands, sell DIY jewelry and crafts and go on the hunt for wine and beer bottles to recycle. Teens who excel in certain subjects can make a good hourly rate as tutors.

These just skim the surface, but you get the idea.

How to teach kids about the importance of saving money

Talking with your kids about the importance of saving money shouldn’t be a taboo topic. Financial literacy is just as important as all those other literacies! (Photo credit: Kristen Recalis Photography)

I wish I’d started all of this financial literacy talk with my kids so much earlier, but this is one of those it’s-never-too-late conversations and one that will evolve as my kids get older.

Even teaching preschoolers about money is doable with something as simple as a piggy bank. While mine have always had basic piggy banks, I have seen one that has three slots: save, spend and give. This adds a charitable component that a lot of people will find appealing, too! How you discuss and determine the division of money is obviously your call, but I like that it may also help those wondering how to teach kids to count money as they start dividing it among the different slots.

You don’t need a fancy piggy bank for the save-spend-give idea either. It would work with savings jars just the same, and your in-house crafter would probably have a blast decorating them.

Money activities for kids may also bolster the importance of saving money. Counting money and learning the names for your local coins and bills is a great start. We’re starting to teach our kids how to make change (though that means having actual cash in my wallet!). I love the idea of coin caterpillars and coin-rubbing matching games for younger elementary school-age kids and money-exchange games for bigger kids.

For tweens and especially teens, I think it’s important to start introducing real savings goals using a real bank account. Opening a bank account is a great idea, even if you don’t give your kids access to it for a long (LONG) time. Mine didn’t even know until last year that they had accounts in their names.

If you set up accounts with Tangerine, there are two new features to help Clients (in this case, your kiddo is the Client!) track their spending and achieve even the most aggressive savings goals:

• Goals — this lets Clients establish one or multiple savings priorities, like a big class trip or a car. Then, it sets up regular contributions, and provides real-time updates on savings progress (here’s how it works)
• Left To Spend — this monitors regular expenses (which can be as basic as a monthly clothing allowance or as big as car insurance for the lucky teen who managed to save enough to buy a car), and calculates how much disposable income you have “left to spend” each month (here’s how it works)

Online banking and banking apps are how most of us keep tabs on our money, so our older kids will need to learn at some point. Why not with you? Features like these may even be something you set-up alongside your teens and dive into and track together.

Because what’s most important is leading by example. I know this; I really do. Our kids need to see us making good financial decisions that consistently illustrate the importance of saving money.

We’re getting there. Breaking habits are hard, but I want to do better for my kids so they don’t end up like me — figuring all of this out in middle age.

DISCLAIMER: Tangerine compensated me for this point. All suggestions and opinions, however, are my own.