How to Teach Your Kids to Save, Give and Spend Money

A recent study concluded that American Moms have strong hopes and convictions about their family’s finances. Get a visual on how moms manage money and deal with financial pressures with this Mom Research Study Infographic. Moms find it hard to achieve a good balance for it all – college savings, retirement savings, managing day-to-day expenses and teaching their kids about finances properly. MassMutual Financial Group offers some great resources for planning your family finances. Your attitude about finances reveals a lot.

What kind of financial personality do you have?

Take the Quiz

I took the MassMutual quiz and my Personality Profile is “Successful Planner.”  I’m confident in my ability to make financial decisions and overall satisfied with my financial situation. I research products and offers before making any kind of financial decision. I’m actively involved in my family’s decisions and money management.  Although I am confident, I still recognize the need to seek advice from professionals when it comes to investing and also as a second opinion.

I want my kids to understand money and be confident with their finances one day too. I was able to interview a Mass Mutual adviser about day-to-day finances and how to teach kids about money.  Read on for valuable information that you can teach your children about financial responsibility.

How to Teach Your Kids to Save, Give and Spend Money

How to Teach Your Kids to Save Money

A piggy bank at home can’t give you interest. My daughter is 6, she asked me why we take money to the bank yesterday while I was making a deposit. This is valuable learning time, be sure to talk with your children to be sure they understand concepts instead of brushing it off with a simple answer.

Interest is extra money you earn from the bank when you keep your cash there. So open an account with a savings bank. If possible, find one that:

  • Doesn’t charge monthly fees or ask for a minimum balance.
  • Has a good interest rate. When comparing interest rates, be sure to consider how often interest is compounded.
  • Is conveniently located.
  • Is insured by the FDIC (Federal Deposit Insurance Corporation).

For Those Interested in More Interest: The longer money stays in most bank accounts, the more interest it can earn. If you have enough money put aside and are willing to leave it untouched for a while, these two options might give you an even higher interest rate:

  • A Certificate of Deposit, or CD
  • A Money Market Account

How to Teach Your Kids to Earn Money

To make a little extra cash, encourage your children to complete chores for family and friends–and earn a weekly allowance. They could also start your own business! Here’s how:

  • Nail down the business’ purpose. It can help to write out a Mission Statement–a sentence or two describing the business’ goals. Most businesses do one or more of these things:
  • Provide a Service: Mow lawns, run errands, walk dogs, teach or tutor others, set up Web sites, entertain at children’s parties, organize closets, or clean out garages.
  • Manufacture a Product: Create newsletters, holiday cards, personalized T-shirts, bird feeders, jewelry, Halloween costumes, or balloon sculptures.
  • Sell a Product: Offer products like those listed above, or ones produced or made available by others, such as trading cards, magazine subscriptions, or used books and games.

How to Teach Your Kids to Budget Money

A candy bar here, a new CD there–these can seem like minor expenses BUT they can really add up. Giving up a few occasional treats can help your child reach financial goals much more quickly. To help decide what to cut from the budget, try this:

  • Track each and every cent spent for an entire week. A quarter in a gumball machine, a slice of pizza, a music download–write it all down!
  • Take a look at the list of purchases with your child and ask:
    • Was the money spent this week more or less than your child’s income?
    • Was each and every item bought this week worth the cost?
    • Could any of these costs be reduced without too much sacrifice? If so, how?
    • Before spending money this week, did your child first put aside any savings?

After thinking the list over, use the conclusions to create a realistic budget. It should allow for pocket money and charitable donations while still ensuring that some savings are put aside weekly.

How to Teach Your Kids about Charitable Giving

Helping out charities is an important part of being a responsible member of a community–and the human race! Here are some ideas for how your child can contribute to a worthy cause:

  • Donate Money: This includes donations from money that received as gifts or allowance, earned doing odd jobs, solicited as donations from other people, or made at events set up to help charities, such as bake sales. You might also encourage your child to give up a treat–like a weekly trip to an ice cream store–and donate that money to a favorite cause instead.
  • Donate Things: Many charities accept new or gently used clothing, books, toys, or other items, which they distribute to people in need. Some groups also hold food drives, accepting packaged food.
  • Donate Time: Time is a valuable gift. Many charities depend on volunteers to do much of the work. Your child could read picture books to toddlers at the library; help or entertain the residents at a local nursing home; walk dogs or clean cat cages at an animal shelter; or do errands for a neighbor in need. If your child has special skills (such as sewing or playing a musical instrument), volunteering might be a way to put them to good use, as well as to develop them further.

Teach Kids about Money through Example

It is important for moms (and dads) to teach their kids to be financial responsible. Many people are living beyond their means, teaching their children that it is OK to live for the moment, whether you can afford it or not.  If children get everything handed to them growing up, they will never learn the value of a dollar. This is a huge disservice to your children.

A good way to teach children the value of a dollar is to have them shop with you.  I explain to my children what an item on sale means and how much further a dollar goes when you buy the bread that is on sale for $1.50 instead of $3 and so on. If they see you reach for the expensive item every time, regardless of price, they will learn that it is OK to buy whatever you want, whenever you want.

86% of moms teach their kids lessons in finances starting at around 6 years old, focusing on saving first. A fun way to teach kids to save money to to have your child save their money for an expensive toy. This could be something that is $20 when they only have $5 – or larger items like a new video game or even a bike. Teaching kids to save money is just as important as teaching them to earn money. Do your kids see you saving money for large items like a car, vacation, playground, etc?

I haven’t actively involved my kids in knowing grown-up expenses or savings for items like a vacation. For 2013, I’m doing something new. I’m implementing a Vacation Fund. I’m going to show my kids in a visual way that you can save for large items. I plan to have each child have their own savings bank marked for vacation only. They can save as little or as much of their money in this savings bank for their vacation fund play money!  My husband and I are saving a set amount monthly to make vacation planning easier – a little each month can turn into a lot if you start saving now!

I just saw that Cedar Point has a special for their season passes. You can pay just 6 payments of $18 for a seasons pass. This is a way to “save up” for something you really want when you do it AHEAD of time – start in November and you’ll have the season pass paid for before the season even starts!  I think emphasizing paying ahead and saving is much more valuable than “making payments” on an item that you may not really be able to afford.  This could be a huge lesson for kids (and many adults).

Saving money for college, retirement, is paramount. It doesn’t “just happen,” it takes planning. Consider allowing MassMutual to help you get there.

We let our kids know when we put money into their college savings fund, it is just a little reminder to them that some things require saving money for a long time.  Saving for your kids’ college education is something they will be grateful for when they turn 18!  Saving money for your retirement is something an “older-you” will be grateful for as well!

To learn more, visit the MassMutual website. Like MassMutual on Facebook. Follow MassMutual on Twitter.

I wrote this post as participation in in a blog tour for Mom Central on behalf of MassMutual and received compensation in the form of an Amazon gift code to thank me for taking the time to participate.

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Founder and Lead Blogger at Akron Ohio Moms
Cindy is the top Akron Blogger with her own take on awesome brands for families, where to vacation for families, a beat on local activities and family fun, a knack for getting moms to share , and a house that is always 2 weeks away from a complete remodel!
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