According to Northwestern Mutual’s 2018 “Planning & Progress Study,” the average American has $38,000 in personal debt. Personal debt, in this case, means any type of debt excluding a mortgage, so that includes student loans, medical debt, and credit cards. While there are many reasons people can fall into debt, one way to prevent this struggle that can be more easily managed at an early age is learning fiscal responsibility. Being able to manage money is not something people automatically learn when they turn 18, rather it is something that can be taught, starting at a young age. One of the biggest points that most people think about when it comes to teaching children about money management, which will be discussed below, is how to save money. A more important thing to consider when teaching your children about saving money is showing them by example how to be responsible with money.

Many Americans don’t care to talk about money; we have been conditioned to think that it is uncouth and improper to discuss finances openly. When practiced in a household, this philosophy can wreak havoc on future financial decision-making skills for children growing up in that atmosphere. While it isn’t necessarily recommended that you share your salary and all of your bill totals with your children, it is important for them to see you budgeting and being involved in that process to an extent. Share your grocery budget with them, and let them help you add it up while at the store. If you’re planning a vacation, discuss with them what things are worth spending money on as a family, and what other things you can skimp on in order to save money to pay for the important things. For example, maybe going on a horseback riding tour is important to you, so in order to pay for that you’ll cook one extra meal at your Airbnb.

These types of discussions will blend into your children’s immediate lives as well. What is important for them to spend their money on? What are they saving towards? How are they earning this money? While most kids automatically think “allowance” as the only option for earning money, there are other ways to help them creatively find new streams of revenue. Depending on your financial standing, you can set up a system where certain chores are mandatory in order to receive their allowances (such as keeping their rooms clean and helping with dishes), but other out-of-the-ordinary chores (like deep cleaning the master bathroom or pooper scooping the entire back yard) can earn them extra money. They can also start their own (very) small business: selling lemonade during the summer, providing lawn service and sidewalk shoveling services, or even selling old toys and books they no longer use.

Now that your child is earning money in some way, you need to teach them how to save it. Together as a family, pick a predetermined percentage of money that they need to save in their piggy bank (or bank account, depending on their age). Adults should ideally put around 20% of their net income into their savings account, so that can be a good place to start. Instead of a solid traditional piggy bank, it can be a good idea, especially for younger children, to use a clear Mason jar. This is suggested so the children can see a visual of their money growing, the longer they save. To help with their motivation actually to save their money, instead of running down to the corner store to pick up the first candy or little toy they see, talk together about what kind of fun thing they could buy if they saved enough money. Do a little research together, based on their interests, and let them pick an actual physical item for them to be saving towards. When they have chosen their goal, print out a picture of it and hang it next to their piggy bank to remind them why they’re waiting to break out that money. When they have saved enough money to purchase their goal, make a big deal about it!  That’s a huge accomplishment, just as if an adult were saving up for a large purchase. Celebrate them and keep those conversations about money going, and the next thing you know you’ll have a financially savvy young adult who is ready to take on the world.