How to Teach Toddlers to Save

Introducing money management to young children

by Shana Mongroo

Giving children a weekly allowance has been a much-debated topic among parents today — the amount, the age at which it should start, and whether or not it should be dependent on the completion of chores. Still, most would agree that having an allowance can help a child learn to manage money from an early age. Though this age will vary depending on the child, in the opinion of psychotherapist Lystra Mahabir-Mongroo, children as young as three years old can begin to grasp these concepts.

“For children to truly remain vested in this project, it is important for them to feel that they are in charge, that they own this project and [that] their parent can act as a consultant. The amount the child saves is not as important as the action of saving, so whether it’s a quarter a week or five dollars a week the [most] important [thing] is to learn the value of saving,” explains Mahabir-Mongroo.

Outlined are five guidelines to start this process with your child: 

  1. Encourage Savings: Provide your child a novel way to collect their savings such as engaging in a jar decorating activity to personalize their piggy bank. They can glue images of what they are saving for onto the jar or decorate it in their favourite colours, writing the name of what they want to save for on a removable sticker.
  2. Develop Spending Habits: Allow your child to take out a certain amount once a week to make an inexpensive purchase of their choice. This helps them learn the process of paying for something and getting change. It instils in them the feeling of control because they are paying for something themselves, and helps them better understand the value of the money.
  3. Save For a Larger Purchase: Encourage your child to save up for a larger item, helping them calculate how much they would have to save per week. It’s important to choose something they can realistically purchase. You may also opt to pay for half or to match their savings to further encourage their long-term saving habits.
  4. Motivation and Satisfaction: Another way they can be encouraged to save is by having a gift fund to buy presents or to buy materials to make presents. The satisfaction felt when giving the present will motivate a cycle of saving again to achieve the same feeling. This will enable them to further appreciate the value of managing money.
  5. Broader Values Learned: Learning to save teaches children patience and can translate to understanding when parents do not instantly gratify their needs. They will also learn that saving is an important part of effective money management and self-empowerment, and apply these lessons to setting personal goals and developing self-discipline in other aspects of their lives.

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