Money lessons: Teach children to save

Teaching kids to save money is no easy task. Humans are naturally programmed to consume. When you compound a child's short attention span with multimedia marketing that's targeted directly at them, it's easy to understand how the last thing on a child's mind is saving money.

Adults, on the other hand, can think more logically to try to curb the impulse to spend, even with all the same factors that tempt them, too. Logic and personal experience are key tools that parents can use to help teach children to save money.

A parent who struggled to achieve their financial goals or who didn't have an emergency fund in place when it was needed doesn't want their children to experience similar hardships. Techniques that teach youngsters how to save money as a kid, adolescent and teenager can help parents have an early and long-lasting effect.

Early money lessons

To get kids to the point where they understand the value of setting savings goals, first you must pour a financial foundation, starting with counting and money recognition when they're toddlers.

Count everything out loud with your little one listening: the number of toys getting put away into the toy box, how many pieces of food you're putting on their plate, how many drawings of an animal are on each page of their animal picture book.

At some point, they'll start to parrot you without really understanding what they're saying. What they'll know, especially when you cheer them on, is that they're saying the correct thing.

Buy them a toy bank and play money. Identify which are coins and which are paper, and where each goes in the bank. The actual denominations of the money don't matter right away; you just want them to recognize the difference.

Things happen quickly in the preschool years. Kids will start to understand the concept that a number means an amount and be able to point and count out loud to answer when you ask "how many" questions.

Elementary money lessons

As children enter elementary school, the two-fold lesson they should begin to understand is that money is earned and that money has value.

At this age, giving kids small chores and an allowance for completing them will quickly teach them that work equals money.

They'll also see that you must take action — swipe a card, count out cash, hold out your phone, write a check — to receive something. This teaches them by example that money has value because money equals getting stuff.

With those concepts understood, you can introduce the idea of a savings goal and how to reach it. For example, when a child sees an ad for a new toy and asks you to buy it, you can explain that the toy costs money and that the child will have to do their chores and save their money to be able to pay for it.

Some visual techniques to help encourage children to save for that toy might be:

• Create a chore chart showing how much money will be earned each time the task is completed. Mark the chart every time a chore is done.
• Collect allowance in a clear jar so kids can literally see how much money they're saving.
• Print out a photo of the item they're working toward purchasing and attach it to the chore chart or allowance jar.
• Use the photo on a progress chart that shows how close the kids are to saving enough to buy it. You might want to help by offering to pay for part of the amount. In that case, you can put a star on the chart to indicate the point where the child has saved up enough money to get your help.

There's a good chance that at some point kids this age will impatiently point to your plastic cards and ask, “Why can't you just pay with those?” This is the time to explain the idea of debit cards — and how you must already have the money in your bank account to be able to use that card to pay for things.

These years will also offer opportunities to discuss how to prioritize using money. Divvying money into save, give and spend buckets (physically or digitally with money apps) teaches children about how to budget for the things they want now while still saving for the goals they want to reach later.

Middle school money lessons

The financial framework is in place, and now it may be time to give your kids their first true banking experience. Youth bank accounts are often the first place to start to help reinforce the benefit of the money management habits children have already learned.

Two types of accounts that can help your children are a checking account and a savings account. If they're unfamiliar with the difference between a checking and a savings account, now's the time to teach them. Also, USAA Federal Savings Bank is here to help through our USAA Youth Spend account and USAA Youth Savings account.

While the child is the primary savings account holder, you will be a joint account holder and keep an eye on things by setting up controls to:

• Allow access to the bank's website and mobile app.
• Choose whether your child can transfer money and make deposits.
• Select the accounts and statements your child can view online.
• Sign up for text alerts, such as low account balance.

In this way, the child has the freedom to practice their own financial responsibility, but not so much freedom that could put your family finances in danger if things got out of hand.

Another parental perk is that once a youth banking account is in place, you can deposit allowances or money gifts directly into your children's accounts.

This could also be the time for conversations about the differences between short- and long-term savings goals and setting up multiple savings accounts or buckets for multiple goals. Preteens and young teenagers start to earn money beyond chores at home, like babysitting or mowing lawns. With both youth savings and spending accounts in place, these kids can see a more comprehensive view of their money and be more hands-on about budgeting how much to put in savings versus how much to spend.

Money lessons for older teens

Older teenagers start to join the workforce and receive their first paychecks. This is when they need to learn about the differences between gross and net income, tax deductions and even the process of filing tax returns.

It's also the time for them to reassess their savings goals, which are more likely to be short term for high-dollar items like the latest devices, or long term for investments like a car, car insurance or a college fund.

Account features like direct deposit and transfers can help teens budget their paycheck to reach those short- and long-term goals. Once they turn 18, their youth accounts can be converted to the bank or financial institution's traditional adult checking and savings accounts.

Just because the account is now an adult account doesn't mean that your child no longer needs guidance. Lessons about credit and investing — topics that parents might benefit from reviewing again themselves — may still need to be taught. Remember, every child is different. Some may grasp these ideas right away; others may take a little longer. That's OK. If you're consistent and supportive, the hard work of teaching kids to save money should pay off — with interest — in the end.