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Teach Kids About Saving


Here are 10 Ways to Teach Your Children

How to Save and Help Them Successfully Join the Next Generation of Home Buyers

April is financial literacy month, we wanted to take a moment to help lay the foundation for helping today’s children and young adults become the next generation to experience the joys and wealth-building benefits of home ownership. Since so many people are spending a little more time at home this is the perfect time to start.


Because in reality, personal finance and wealth—as well as how to build and manage it all—is a topic of conversation rarely covered in-depth. As a result, many children reach adulthood lacking the fundamentals they need to feel confident about their financial future.


With savings and other personal finance topics not being taught as a core part of school curriculum, it often falls on our shoulders as parents to teach our children how to manage money. So, to help you do just that, we’d like to offer a few simple tips to help you and your children start their future finances and journey to home ownership off on the right foot!


Here are 10 ways to teach your child the importance of savings: 

  1. Give them the right footsteps to follow in. As the one responsible for teaching your children how to save and handle their money, it’s important to reflect on how well you manage your own finances. After all, our children tend to mimic even our most subtle of actions, so it’s wise to go beyond a “do as I say and not as I do” approach, and ensure your financial habits reflect the advice you’re trying to pass on.


  1. Make their savings progress visual. Children are visual learners. So, to help them visualize the power and progress of saving money, use a clear jar or piggy bank to hold their savings. As an alternative, you can get them involved even more by turning this into a crafty, do-it-yourself opportunity by recycling and decorating their own container to use. Either way, being able to watch their money grow is a powerful visual. Plus, it can encourage your child to save even more so they can watch it fill up even faster!


  1. Help them open their own savings account. Once their savings begins to outgrow their piggy bank, opening a savings account for your child is a logical next step. Not only do they get to feel more prideful and grown up, having their own account gives them the opportunity to learn about all the ways a bank can help them today and in the future.


  1. Turn allowance(s) into an incentive. If you want to teach your child to build a solid work ethic and savings habits all at once, this is a great starting point. Just giving an allowance doesn’t teach the relationship between earning or saving money. So instead of just handing them the same thing each week or month, consider starting with a set amount of work and “allowance”, and then offer more for extra tasks they finish around the house. This way, instead of some abstract “reward”, an allowance becomes a tangible way to help show money is earned, not given.  For a list of allowance types (and suggestions on how much to pay for chores), check out this link.


  1. Teach your children to pay themselves first. As they begin to consistently earn their own money, setting aside a minimum percentage of everything they earn is a valuable habit to carry into adulthood. Doing so means that no matter what they earn now and, in the future, they are always mindful of setting aside at least, say, 10-20% of their income. After all, saving instead of making impulse purchases is like building muscle. When it comes time to save for a down payment for a home (or any future goal) in the future, they’ll already have the financial savvy and willpower to do so!


  1. The power of budgeting. Budgeting is an essential financial skill that needs to be developed as early as possible. Dividing money into “buckets” such as spending, short-term saving, saving, and giving is a great starting point. Develop a budget for your child to show them the importance of living within their means, no matter how small their earnings are. This will help foster financial discipline and is now easier than ever thanks to the dozens of simple budgeting apps on the market.


Helping your child divide (budget) their earnings will teach them how to live within their means, regardless of how big or small their income is. Just like paying themselves first as a foundation for their savings, budgeting will help create financial discipline. If appropriate for their age and needs, here are 7 fun money apps for kids.


  1. Give them a goal to save towards. Purchasing a home may be way off in the horizon, depending on your child’s age. Right now, their savings goal may be something closer to the newest video game console, name-brand clothes, or their first car.


  1. Credit vs Debit. With checking and/or savings account, comes the responsibility of a debit card. Once your child has a good understanding of savings and debit card usage, consider introducing them to credit cards. Discuss things like credit limits, interest rates, how purchases effect credit utilization and their credit scores, monitor credit, etc.


It’s also worth instilling the importance of paying off credit balances as soon as possible. The earlier they can understand how credit works, the more responsible they will be when they have their own.


  1. Creating their own stream(s) of income. Eventually, your child will move beyond allowances and need to start exploring how to make their own money. This could be a summer job or helping start their own business cutting grass, creating or finding things to sell online (ex. Etsy or eBay), babysitting, etc.


They certainly don’t have to achieve complete financial independence before they set off on their own, but kick-starting the process of earning their own income will give you both peace of mind when they eventually leave the nest to go out on their own. For ideas, check out this list of 50 ways to make money as a kid.


  1. Show, don’t tell. Once again, children are visual learners. Although saving will likely be a fun new experience for them at first, eventually, some of that money may start to burn a hole in their pocket. In addition, helping them understand the difference between a ‘want’ and a ‘need’ item, it’s important to use this as a learning opportunity. Instead of telling them the cost of what they want, help them subtract that amount from their savings to visualize the impact their purchase will have.


Doing will them will teach a lot more than just a simple talk. While growing their savings, you can teach these lessons earlier on by purchasing a simple set of play money that usually comes with a little cash register of its own. Here are a few fun, printable play money templates.


Starting healthy savings habits today can help the next generation become responsible homeowners.

When the time is right for you, we can help you with your next home mortgage.


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While Opes Advisors, a division of Flagstar Bank, Member FDIC, Equal Housing Lender, uses all reasonable efforts to ensure that this information is current, accurate and complete on the date of publication, no representations or warranties are made (express or implied) as to the reliability, accuracy or completeness of such information. Opes Advisors, a division of Flagstar Bank, therefore, cannot be held liable for any loss arising or indirectly from the use of, or any action taken in reliance on, any information appearing in this.

Opes Advisors, a Division of Flagstar Bank | Member FDIC | Equal Housing Lender