Content of the material
- Give them fake money
- 7. Leave Room for Mistakes
- Make use of age-appropriate spending cards and parental control apps
- 9. Talk About Money
- Online ways to make money as a kid
- 5. Earn pocket money from doing chores
- Dont forget to prioritize your own retirement savings
- As They Grow, Sell
- Automate your savings
- How to Save Money for College
- 2. Set up saving goals
- How Teenagers Can Save Money Fast
- Step 1: Opening a Savings or Checking Account
- Step 2: Find a Job or Side Gig
- Step 3: Create a Budget
- Step 4: Set Short and Long-Term Goals
- Step 5: Track Spending
- Benefits of teaching your kids about money
- The value of a dollar
- How to save for long-term goals
- What disposable income really means
- How much retirement might cost and how to save for it
- Overall financial independence
- Teach Along the Way
- If you receive $50 or so for your birthday or for Christmas, try to take only ten percent of the money to put in your wallet and the rest in your piggy bank or money jar. Keep doing that whenever you receive money and before you know it, you will have saved a ton of money.
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Give them fake money
This might seem a bit out there. However, the positive aspect of fake money is that it teaches kids about how money works without involving any real money. Essentially, it’s a set of training wheels for future consumers, with you acting both as merchant and bank.
To make this stick, assign reasonable values to various chores, such as making their bed or cleaning up after a meal. You can also apply this to privileges, such as movie night and their wants, like popcorn for said movie night.
7. Leave Room for Mistakes
Part of putting kids in control of their own money is letting them learn from their errors. It’s tempting to step in and steer kids away from a potentially costly mistake, but it may be better to use that mistake as a teachable moment. That way, they’ll know in the future what not to do with their cash.
Make use of age-appropriate spending cards and parental control apps
Today, you use apps for just about everything. So, why not use an app to improve your child’s financial education?
With Greenlight, you can reload a prepaid debit card for your kids. Through an app, you can supervise and control the card. The card is designed to load instantly, leave notifications every time your child uses it, and turn on and off instantly. Another feature worth mentioning is that it also lets them save their change.
9. Talk About Money
In a 2021 T. Rowe Price survey, 41% of parents said they don’t like to talk with their children about money, with many expressing embarrassment about bringing up the topic. However, if you want kids to learn about saving, you have to nurture an ongoing discussion. Whether you schedule a regular weekly check-in to talk about money or make money chats part of your daily round, the key is to keep the conversation going.
86% The percentage of parents who need to either increase or replenish their emergency fund in the wake of the COVID-19 pandemic, according to a 2021 T. Rowe Price survey
Online ways to make money as a kid
If your child is digitally savvy, then they may be more inclined to find ways to make money online instead. Either way, your child should ask your permission before they embark on ways to make money. Since they are minors, they need parental permission to engage in these activities.
- Take online surveys. I love taking online surveys and so do my kids! These can be a lot of fun, and since the kids are on their devices more often than not, they might as well be making some money at the same time. Some of our favorite online survey sites are Swagbucks and MyPoints.
- Create illustrations. If your child likes to create illustrations, then they could make some money with this skill. Get them a decent illustrating tablet and intuitive software (I suggest Clip Studio Paint Pro) and they will be on their way. A great website to have them set up a portfolio on is Deviantart.
- Make crafts or jewelry to sell online. If your child loves to create jewelry and crafts, then selling them online may be a great way for them to make money as a kid. The most popular website for things of this nature currently is Etsy.
- Make YouTube videos. Our kids today are technology savvy, right? YouTube is a platform where some decent money can be made if your child loves to create videos. Kids can be product testers and make videos of them testing out products from different companies. Even if your kid just wants to make videos talking about particular subjects (video games, how-to-videos, etc.), they can place ads in their videos to start generating income. As a parent, however, you should be monitoring this money-making avenue closely.
- Sell their old stuff online. There are many different platforms for your kids to sell their old stuff online. Some of our favorites are eBay, Facebook Marketplace, Craigslist, Poshmark, and Amazon.
- Start a blog. If your child loves to write, starting a blog at a young age could potentially help your kids get to the point of monetization by the time they could really use it. Writing a blog can be a lot of fun, but it can take a while to start making money with a blog. So this could be more of a longer-term goal that kids can grow into over the years.
- Start taking photographs. Taking photographs can be a great way to put your child’s hobby to good use. Some of the best sites that might be willing to pay them for their photographs are EyeEm, Foap, and Scoopshot.
- Streaming. If your child is already big into watching streamed live content, then it may be time for them to start creating their own. Live streaming through Twitch is a great way to get them started.
- Selling digital goods. Creating an ebook or a course is a great way to begin selling digital goods with very little overhead.
- Making music. If your child has a musical ear, then this may just be the money-making genre for them. One of the best places to get started is Spotify.
- Create games. One of my children is huge into video games and is always coming up with ways for the games to be better. If this sounds like your child, then it may be time to investigate creating their own game and monetize it (trust me, it’s a lot easier than it sounds).
- App tester. Since most of our kids are very embedded in the digital world, it only makes sense for them to make some money by testing apps. There are quite a few places your child can begin doing this, but two of the best places to get started are TesterWork and UberTesters.
5. Earn pocket money from doing chores
Not all children get pocket money, but quite a lot do. Some parents choose to reward children for doing chores around the house.
According to The GoHenry Youth Economy Report, the UK’s top tasks completed by young earners are (plus a guide to the going rate):
- Tidy room – £1.03
- Brush teeth – £0.70
- Make bed – £0.81
- Homework – £1.18
- Get ready for school – £0.71
- Load/empty the dishwasher – £0.88
- Feed pets – £0.88
- Vacuuming – £1.20
- Put clothes away – £0.70
- Empty bins/recycling – £0.76
Remember, this is only a guide and it’s not how much you give that’s important, but the fact that you pay regular pocket money.
Tasks that your child can complete will also vary by age – older children could perhaps help with ironing or cooking, and younger children can lend a hand with hoovering or dusting.
Some parents opt to give payment by chore, and others prefer paying a set amount in reward for the completion of a set of tasks.
Others create a list of jobs, some of which are done without reward and some which are rewarded with pocket money.
Dont forget to prioritize your own retirement savings
No matter what, experts agree you shouldn’t save for kids to the detriment of your other goals.
“While your child can apply for financial aid or college loans down the road to help cover the costs of college, you cannot take a loan out to fund your retirement goal,” notes Castro. “It is a great gift to your children for you to retire successfully and be financially independent, even if that means you are not able to save as much for their college expenses.”
Drake underscores this idea, explaining that his office sees a lot of young couples who deal with student loan debt and want to ease that burden for their children. However, these younger couples are often saving money in a 529 plan for their child while neglecting their own retirement savings.
“I have three kids and I know how difficult it can be to put yourself first,” Drake says. “However, you have to prioritize your retirement savings. If you are meeting those savings goals and have money left over, then consider saving for your children’s future college expenses.”
As They Grow, Sell
Part of the reason that kids are so expensive is that they grow out of what you purchase for them. That highly-rated car seat you invested in and those super-warm snow boots that you sprung for last season? They have a shelf life. Thankfully, there are many services out there that allow parents to sell the items their kids outgrow. According to OfferUp, a platform that lets you sell gently used items to people who live near you, there are certain times of the year when parents can get the best value for certain items:
- Crib: If you sell your crib in March, you can earn 30 percent more than if you sold it in December.
- Stroller: Because more babies are born in July and August, necessary items, like strollers, are in high demand in June, earning you 10 percent more than any other month.
- Snow Gear: October, right before the snowy weather begins, is the best time to sell your snow gear. You could earn $110 in October versus $90 in November.
With your earnings, you can buy new or used items that your kids currently need, or sock that money away.
Automate your savings
According to Castro, the easiest way to save is by setting up monthly automatic contributions into any savings accounts you have, including savings accounts for a child. This way, you begin to think of your savings like a bill you have to pay before you spend on other items.
With functions like goal setting, customized budgets and personalized insights and recommendations on areas where you could be saving, Castro says an app like Mint can help you track towards your long-term savings plan.
How to Save Money for College
According to the College Board, the average tuition at a four-year private college reached $37,650 for the 2020-2021 school year; $10,560 at an in-state public university. Add in room and board and multiply by four years, and it’s clear why saving for college is a huge financial challenge for parents.
If you haven’t already started an education fund for your child, consider starting one now. The more time your money has to compound and grow, the better. And given the enormous cost of a college education, it helps to pay into a college fund over multiple years to help avoid diverting money from your retirement or emergency funds to pay for tuition. The following strategies may help you get started.
2. Set up saving goals
Encourage your children to set up saving goals. If they are saving for something in particular, for example, a games console, you can help them establish a savings plan. Work out how much money they have to start with, then what they need to save to reach the total. Agree on a time scale, and encourage them to be realistic about their goal. Saving for something high value is not going to be achieved in weeks, it could take months before they reach the set total. Understanding that saving takes time can be a challenge, but it is a lesson well learned.
If possible, agree to match or support their savings, or add a little bit of interest as their money grows, to give them a boost towards their goal. Incentives can be very persuasive.
How Teenagers Can Save Money Fast
The majority of Gen Z, born mid-1990s to early 2000s, say they’re unclear about how much to save versus spend. It’s essential to understanding how to earn money and set budgets, especially moving into adulthood.
Step 1: Opening a Savings or Checking Account
Your teen will need a place to stash their cash. The porcelain piggy bank may have worked when they were younger, but now is an excellent time to consider a savings or checking account. Opening a checking or savings account can help establish a relationship with a local bank or credit union while familiarizing your teen with these fundamental financial tools.
Your teen can open a savings account jointly with a parent or guardian. Both names will remain on the account as long as it’s open. There’s an option to remove the parent or guardian from the account once the teen turns 18.
You’ll need a driver’s license, passport, or other government-issued photo ID to open an account. You’ll also need to provide a Social Security card, and some banks may require additional documentation. Pay attention to the interest rate, fees, and minimum balance requirements for committing to the financial institution.
Step 2: Find a Job or Side Gig
One of the most valuable ways your child can learn about saving is by earning money. U.S. Department of Labor research found that every year a person works in their teens, their income rises 14% to 16% in their 20s. In addition to earning money, employment teaches responsibility, instills positive work habits, and improves time management and organizational skills.
Keep in mind that the minimum age for employment is 14 years old, and the hours a teen 16 or under can work are capped. If your teen is too young for a traditional job, mowing the neighbor’s lawn, babysitting, or tutoring can keep income flowing.
Step 3: Create a Budget
Budgeting as a teen is not much different from budgeting at any other point in life. Budgets help prioritize spending and create awareness of the money coming in and going out. And because teens have fewer expenses, the process is more straightforward.
Budgeting begins with knowing how much your teen earns. Whether it’s income from a part-time job or side hustle, total the monthly earnings. If the amount varies from month to month, be conservative with estimates.
Build a list of wants, needs, and wishes with your teen. Needs are basic living expenses or required expenses. For your teen, it may include gas money, phone bill, or car insurance. Wants are items they can live without, such as eating out, new clothes, or their gym membership.
Step 4: Set Short and Long-Term Goals
Set SMART (specific, measurable, achievable, realistic, timely) financial goals with your teen. Goals will help motivate teens to challenge themselves. They help your child think about the big picture and focus on the future instead of immediate satisfaction.
Short-term goals could include buying a new video game, trendy pair of sneakers, or concert tickets. While long-term goals may include saving for college or their first car.
Have your teen put their goals in writing to make them more concrete. Every time they receive a paycheck or allowance, they should designate a portion toward their goals. Consider motivating your child by offering to match, dollar for dollar, to what they save toward their long-term goal.
Step 5: Track Spending
Knowledge is power. Part of knowing how to save money fast as a teenager is knowing how to be a savvy spender and tracking where your money goes. A good old pencil and paper will work, but your teen may find it easier to track their spending and savings using an app. Certain banks and credit unions offer apps tied to savings or checking accounts.
Benefits of teaching your kids about money
The benefits of teaching your kids about money are almost endless, especially in today’s society where most of us have more debt than income. If you can begin teaching our kids about money when they are really young, then they will grow up knowing more than you did.
The value of a dollar
One of the biggest, and easiest, lessons to teach your children about money is the value of a dollar. This lesson can begin with the grocery store example from above. A good way to do this, depending upon their age, is to tell them how much money you have budgeted for this particular grocery trip. Then, they can help you add up all of the items as you go.
When kids do this, they get to see a physical example of how much groceries really cost. Once this concept is grasped, the next step is to give them a small amount of money to spend on their own. Start with $1 or $2 to show them how far that little bit of money doesn’t actually stretch.
How to save for long-term goals
Opening up a savings account for your kids is a great way to help them begin to save money for long-term goals. When they are younger, they won’t have access to withdraw funds themselves, so you will be in charge of what they can take out.
A good way to drive this point home is to have them choose something big that they would like to save for. Depending upon their age, that can vary widely. But some items to consider may be:
- Video games.
- Gaming console.
Once you and your child have chosen their big item, then you can help them break down the total cost and how long it will take to save the money to get there. The deal is that they won’t be able to take the money out of the savings account until they have the full amount due for the item.
This can really help keep them laser-focused on the big goal and hopefully get them interested in finding other ways to make money as a kid.
What disposable income really means
As kids get older, they start to understand a bit more about bills and how much things cost. Teaching them about monthly recurring living expenses is a really good lesson to impart before they fly the coop. I know my first years as an adult were spent living hand to mouth and eating the cheapest foods I could find. This was because I had little to no money since almost everything I made went to living expenses.
Teaching your kids about what disposable income really means is exceptionally important. This message can be taught in a few different ways. But, a great way to show them is to have them go through your budget with you. This way they can see what your recurring expenses are as well as any remaining money, or disposable income.
How much retirement might cost and how to save for it
When it comes to retirement, I suggest telling your young kids to include this number in their monthly recurring expenses budget. This way they will be sure to put something away towards retirement every single month and not let it fall by the wayside.
How much retirement costs will vary depending on where your child chooses to live and what they have planned for their retirement. The conversation will look different depending on the ages of your children as well. No matter their age, even if they are saving only a few dollars per month toward this far-off goal, they will nonetheless be developing habits that will keep them on good financial footing throughout their lives. And as they get older and begin to earn more they can begin to save more.
This will be extremely helpful to them due to the magic of compounding. If only I had known about compound interest when I was a teenager. Oh, how I would have made different financial choices!
Overall financial independence
The biggest benefit your children will get out of you teaching them about money at a young age is the ability to achieve financial independence. This is a big one! Especially because a lot of us, as parents, haven’t even achieved this.
Since we, as parents, want our children to live a better life than we did, helping them to achieve financial independence only seems natural. And one of the best ways to teach them that is to get them involved in making their own money as kids.
Teach Along the Way
Your saving efforts can also present opportunities to teach your child about money. They’re going to be on their own at some point, so why not set them up for success? Sowhangar suggests getting them involved early on by teaching them the value of money and setting realistic expectations. "They can learn there is a value to a dollar, money does not just grow on trees and hopefully, they will be less likely to put pressure on the parents in their teen years," she says.Trae BodgeFinancial Expert
Trae Bodge is WD’s financial expert and Everyday Saving columnist.Laura Hanrahan
Laura is a NYC-based freelance writer. When she’s not binging the latest true crime docu-series, she’s obsessing over all things Harry Styles, RHONY, and John Mulaney. You can follow her on Instagram @lauraehanrahan