Tips for Teaching Children About Saving and Spending

Teaching children about money might sound a bit tricky, especially when they’re still learning their times tables or how to tie their shoelaces. But the truth is, the earlier children learn good money habits, the better prepared they’ll be for the future. Saving and spending are two important financial skills that children can start learning from a young age, and as a parent, you’re in the perfect position to help them get started.

Here are some fun and practical tips to help your child understand the value of money, how to save it, and when it’s okay to spend.

Start with the Basics

Before diving into the difference between savings accounts and pocket money goals, it helps to explain what money actually is. For younger children, you can start with physical coins and notes. Let them touch, count, and play with real money (under your supervision).

Explain that we use money to buy the things we need and want. Use simple examples they can relate to, like “We use money to buy your school lunch, or your favourite ice cream from the shop.” You might even want to play ‘shop’ at home using play money, where they can “buy” toys or snacks using small coins. This helps reinforce the idea that money has value.

Give Pocket Money with a Purpose

Giving your child regular pocket money is a great way to help them learn how to manage it. It doesn’t have to be a lot. Even a few dollars a week can teach valuable lessons.

But here is the trick. Instead of just handing it over, give the money a purpose. Encourage your child to divide their pocket money into different categories such as saving, spending, and even sharing (for donations or gifts). You can use jars, envelopes, or small boxes to keep things organised.

For example, if your child receives $5 a week, suggest they put $2 into savings, $2 into spending, and $1 into sharing. This simple method can teach children the habit of saving regularly while still allowing them to enjoy some fun treats.

Set Savings Goals

One of the best ways to make saving exciting is to set a goal. Help your child pick something they really want, like a new toy, a book, or a trip to the movies with friends. Then, work out how much it costs and how long it will take to save for it.

For instance, if the toy they want costs $20 and they save $2 each week, they will reach their goal in ten weeks. Create a colourful savings chart or sticker tracker so they can mark their progress. Watching their savings grow will help them stay motivated and understand the rewards of patience and planning.

Use Real Life Experiences

Everyday life is full of money lessons. Use shopping trips, outings, and even bills at home to explain how money works. When you are at the supermarket, point out why you are choosing one brand over another. Maybe it is on special or better value for money. If your child asks for a treat, talk about whether it is in the budget for the week.

Another great example is comparing a takeaway meal with cooking at home. Explain that making spaghetti together costs less than ordering pizza, and the leftover money can go towards something fun over the weekend.

These real life moments are powerful and help children understand that money is about making choices, not just spending freely.

Open a Savings Account

When your child is a little older, consider opening a savings account in their name. Most banks have accounts specifically designed for children, and some even offer fun rewards or online trackers.

Visit the bank together and let your child be involved in the process. Show them how interest works and how the money in their account can grow over time. It is a good introduction to the idea that saving money does not just mean storing it. It can actually grow with a little help.

You could set a rule that a certain percentage of birthday money or holiday gifts go into their savings account. Over time, they will see how those small deposits add up.

Talk About Needs vs Wants

One of the most important lessons in money management is understanding the difference between needs and wants. This can be a bit tricky for younger children who might think that owning the latest toy is a need.

To help explain, try comparing two items. “We need food and water to stay healthy, but we want that giant chocolate cake because it looks yummy.” You can even make a game out of it by going through a toy catalogue or a grocery list and asking your child to sort items into “needs” and “wants”.

This lesson will come in handy not just when they are young but well into adulthood too.

Let Them Make Mistakes

It can be tempting to swoop in when your child is about to spend all their money on a toy that will break within a day, but sometimes the best lessons come from mistakes. Letting children experience buyer’s remorse teaches them to think more carefully next time.

If they spend all their money on lollies and then do not have enough for the toy they have been eyeing, talk it through with them. Ask questions like, “How do you feel about your choice?” or “What would you do differently next time?”

Mistakes are part of learning, and they will carry those lessons with them as they grow.

Celebrate Their Wins

When your child reaches a savings goal or makes a smart spending choice, celebrate it. Acknowledge their effort and talk about how proud you are. This positive reinforcement builds their confidence and encourages them to keep going.

Even small wins, like choosing to save instead of spending immediately, deserve praise. You could have a little celebration or let them choose a family activity for the weekend.

Keep It Fun and Age Appropriate

Remember, teaching children about money does not have to be serious or complicated. Keep it light, make it fun, and adjust your approach based on their age and interests. Younger children might enjoy using stickers or stories, while older children can handle bigger goals and even start budgeting for school lunches or holiday shopping.

The goal is to help your child build a healthy relationship with money where saving, spending, and planning all have their place.

Conclusion

By teaching your children about saving and spending from an early age, you are giving them a powerful life skill. It is not just about dollars and cents. It is about making thoughtful choices, setting goals, and feeling confident about their future.

With a little guidance, some fun activities, and lots of real life practice, your child will learn to value money and use it wisely. And who knows? You might even pick up a few new savings habits along the way.