As a parent you want what’s best for your kids. You want their future to be bright and filled with even more opportunities and financial security and success than you experienced. One of the best ways to help your daughter have that better, brighter future is by teaching kids how to save money from a young age. Read on for 7 tips that are simple, yet powerful, ways to teach your daughter about saving, spending and investing.
Start Young, Start Small
Believe it or not, even little kids are ready to start learning about money. If your daughter is old enough to earn an allowance, do a job for a neighbor for a little cash, or get money for birthdays or holidays, then she is ready to be introduced to her first piggy bank.
We recommend forgoing the super cute piggies of the past for a simple clear jar — it’s important that she can see how much money she is saving! Set up a jar for spending and a jar for saving and a jar for giving. Teach her how to separate her money into these three jars each time she gets paid.
Start with the “Giving” jar — help her choose a charity, person or cause that she would like to donate 10% of her earnings to. Starting your daughter with the mindset of giving from a young age will help her to not become a money grubber or have scarcity about money.
Teach her to set aside the majority of her money, perhaps 60 percent, into her savings jar. Explain that because she lives at home and you take care of all her necessities she has the awesome opportunity to save a LOT of money. Help her visualize things to get excited about saving for, and not just responsible things that most kids aren’t old enough to appreciate saving for, like college.
Finally, each time she is paid, help her put 30 percent of her earnings into her “Spending” jar. Explain that this jar can be for fun! It can be for going to the movies with a friend or buying a treat from the ice cream man — whatever she likes.
These lessons in spending, giving, and saving will probably come up a lot as she grows up, keep encouraging her to stick to her jars and good financial principles that she can still follow as an adult. From a young age she can have a healthy and financially wise relationship with earning and money.
Allow Them To Earn Their Stuff
It’s easy to buy our girls whatever they want, after all, we want them to fit in and have fun too. The reality is, especially as our kids grow into tweens, that we need to emphasize the importance of working hard to earn their belongings.
You’ll see a your daughter give a special sense of care and stewardship to the items she had to earn and pay for herself. If she wants a new bike, offer to pay half and let her earn the rest. If she’s dying for rollerblades but there are no gift-giving holidays coming up then encourage her to start saving and finding ways to earn the money for them herself.
Help her brainstorm ways to earn more money or to save more money so she can accomplish her goal. She will learn patience and the importance of saving for the expensive things in life, a lesson that will stick with her when she is old enough for her first credit card.
Help Them Visualize Saving
Saving for something whether it’s a long-term goal like college or a car or a short-term goal like a desired toy or pair of shoes can feel overwhelming to first-time savers. Help your daughter visualize how she CAN save for these items by creating a savings chart. Encourage her to use her creativity to come up with a way to track the amount of money she is putting into savings.
Maybe she puts a sticker on a chart for every $5 she sets aside, or perhaps she colors in another bar on a graph to represent more money set aside, whatever type of tracking chart she comes up with will be great.
Put a picture of the savings goal item on the chart and make a big deal each time she adds to her savings. When you do this you teach her that saving is rewarding!
Use Shopping Trips to Teach a Lesson
Our daughters don’t always have a good grasp on how much things really cost. You might have experienced this if your daughter asked for a pair of $100 jeans to start the school year — but it’s not because she thinks money grows on trees; it’s because she doesn’t grasp how much things cost or how to budget or spend money wisely.
One easy way to open your daughters eyes to the value of a dollar is to give her a budget for some necessary shopping that involves her — perhaps that means back-to-school supply shopping or purchasing new clothes after a growth spurt. Set a budget for how much you want to spend on this trip and then let HER decide what to spend and where to shop. She may start out with stars in her eyes, sure that she is going on an all-expense-paid shopping spree until she starts to add things up and realize how far the money really goes.
An activity like this can be done on a small scale by including your daughter in your weekly grocery shopping or in purchasing treats for a family night. Either way she will learn that sometimes buying the off brand is the best choice, or that choosing an expensive item she LOVES means getting less and being ok with that. There are so many financial lessons to be learned when you use a shopping trip to teach the real life lesson.
Open a Bank Account
If your daughter has already been successful with her money jars and she understands the concept of earning, saving and spending then she might be ready for a bank account of her own. This stage doesn’t usually come until your daughter is a tween and may be earning more money then you want to keep in her room in clear jars. Whether she is babysitting, mowing lawns, or earning a regular allowance, you can take her to the bank and teach her the in’s and outs of having her own bank account and debit card.
Teaching her about interest, what happens if she were to overdraw her money, and the importance of tracking her money and accessing her account info online are all big steps that go with getting her first bank account. Even if your daughter isn’t old enough for a debit card responsibility, you can still take her to the bank to set up a savings account only.
Teach Them How to Invest Wisely
Investing isn’t something that has to wait for adulthood when we think of retirement and 401k’s. Teach your daughter about investing when she’s a tween. Teach her the principles of risk taking, wise investments, and interest earning.