Using Spare Change to Teach a Child Life Lessons about Saving

I have endeavored to provide financial lessons for my six-year-old by giving her control over her money. I made the decision several years ago to allow her to keep any loose change around the house. There is one catch, she must keep track of how much money is in her “account," a shiny pink ceramic bear coin bank. Every time she adds the money into her bank, she counts it and adds to the total. I have her simply keep a sheet of paper and mark out the old total after adding the new one.

Next to her coin bank is a list of some of her favorite treats: ICEE, ring pop, ice cream cone, etc. Along with the list of treats is a savings goal. At six, it is funny what a child wants to save money for. My daughter once wanted to save up twenty dollars to get a twenty dollar bill (I just went with the flow on that one). Sometimes she holds some money back for one of her treats.  The important point is that she understands the value of the coins and she can comprehend how that translates into choosing how to spend.

It is amazing how a goal as simple as saving money can motivate even the youngest among us. There is a very small chance that loose coins in my household will not be gobbled up by this savvy six year old saver. Give a young saver the idea of what a quarter is worth in the world of “fun dip and tootsie rolls” and see what you can accomplish for 50 cents.

I strive to make it a learning experience when shopping for toys, treats, clothes, and the things that my daughter can pick out. At other times I may create a spending limit based on a gift card or cash amount which forces her to be conscientious of the trade offs or cost. 

There is a specific way I handle a situation when I know she will see an item she absolutely has to have. Before going inside, I give her some change and let her know she can spend it. I remind her that she can choose to spend it or save it, but it is her decision.

This is how I teach my young girl the value of money. I find that this approach is fun and exciting to her and plants a seed for how to handle money and save wisely. 

Kevin Stokes is the proud father a 6 year old who enjoys fishing and spending time with her grandparents. He is the president of Stokes Financial Strategies, LLC., a financial firm in Springfield MO. For 12 years, Kevin has given financial advise for over 400 client households. For a follow-up comment, Kevin can be reached at kevin@stokesfinancialstrategies.com

The Three Lessons to Winning with Money for Kids

My wife and I teach our kids to do three things with money. We created three money containers for both of our girls that say – GIVE, SAVE, and SPEND.  We feel the three lessons below are the foundation of building wealth and being successful with money from the start. We often ask our girls (ages 3 & 5) what we do with money and it brings us so much joy that they understand these three lessons.   

Lesson #1 – Always GIVE 1^st. We teach our kids to give a portion of what we make to God first. This lesson is top priority in our family because He is the reason we have money, a house, and all the things in our house. This is the lesson that we feel is most important to teach our kids so they become generous givers and to understand that God owns it all. If we are to be good Stewards (managers) of His money, we can’t keep it all to ourselves.  

Lesson #2 – Always SAVE 2^nd. We teach our kids to always save for a rainy day and the things we want to purchase. We created the saving chain. Each link of the chain represents a large amount of money ($1,000) we save up each month using our zero based monthly budget numbers. The last day of each month we let the kids cut off the links and we explain to them why we save.  We want our kids to experience the process of saving for large purchases (vehicles, vacations, or future home). We are teaching our kids the sinking fund approach to saving.

Lesson #3 – SPEND $$ on the things you NEED first before WANTS.  This is a difficult lesson to follow not only for kids but also adults. I struggle with this lesson because I confuse wants vs. needs.  I don’t really NEED a new golf club. I ask my kids if they really NEED that toy.  The toy will still be there when they come back. If we can get our kids to think long and hard before spending the money they save, they will make better choices instead of impulse buying.   

  

More is Caught than Taught

Our family is far from perfect.  We try our best to teach our kids through example. Kids watch everything we do as parents and they won’t take us serious if we don’t practice what we preach. This is one of the reasons why we serve at our church and lead Dave Ramsey’s financial classes that teach these important lessons.  We encourage you to keep it simple and follow these basic principles with your kids so your entire family can win with money.  

Sean Saunders is the father of two lovely daughters who keep him loving and growing as a dad. He is also the husband of Jessica and an avid a golf and fitness instructor in Springfield, Missouri.