Saving vs. Spending: Tips for Teaching Your Kids the Basics

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Take yourself back to your childhood. How did you first learn about saving and spending? Maybe it was a lemonade stand you set up in your neighborhood, the weekly allowance you received for doing your chores, or the piggy bank you got as a gift on your birthday. Chances are you learned money basics when you were young.

How to Talk to Your Kids & Grandkids About Good Spending Habits

We have the scoop on when it’s time for you to talk to your kids (and grandkids) about money and personal finance. Check out our list of age-appropriate things you can do to teach them the basics.

Elementary-aged kids:

You can and should be talking to your elementary-aged kids about money. With kids this young, it’s important to keep it simple and go over the very basics. Money identification is a good place to start. While you should be taking advantage of impromptu conversations about money, kids learn best by doing. Check out our list of things you can teach and encourage your kiddos to do.

  • Talk about needs vs. wants. Help your child make a list of the things they need and the items they want (and should save for).
  • Start giving a weekly allowance. Kids do need structure, but it’s important that they have some freedom to create their own ways to make money.
  • Teach choice. A good way to demonstrate that spending is not the only option is to create two storage jars — one for saving and one for spending.
  • Use cash. Elementary-aged kids can’t wrap their minds around the idea of credit. Get your child familiar with bills and coins by paying with cash when they are shopping with you.
  • Saving doesn’t always mean putting money away. You can teach them that there’s more to saving by asking them to help you cut out coupons or putting them in charge of turning off the lights in their bedroom.

Middle school preteens:

From clothing brands to tech gadgets, middle schoolers are very aware of what their peers have. It’s crucial that you emphasize the importance of saving during these years. You can also start exposing them to more complicated financial terms.

  • Demonstrate how you save. Explain what you’re currently saving for. When you reach your goal, allow your preteen to take part in the celebration (whether your goal was a nice dinner out or a family vacation).
  • Start setting budgets. When it’s time to go back-to-school or winter coat shopping, be clear about how much you’re prepared to spend and what your preteen will be responsible for.
  • Introduce the concept of work. It’s important that middle schoolers understand the concept of work and responsibility. Babysitting and lawn mowing are great things to suggest for first jobs.
  • Dive into more complicated money topics. Talk about credit vs. debit cards, introduce financial terms like stock market and interest, and show your preteen how to write and deposit a check.
  • Speaking of interest, teach by doing. Start an incentive program and agree to pay interest on the money your child saves.

High schoolers:

If you’ve explained the basics of personal finance to your kids over the years, they’re likely ready to have more control over their money. Trust them to make sound financial decisions. Take a look at some of the ways you can help your teen become more independent.

  • Take your teen to open up their own savings account. Allow your child to be responsible for checking up on their account and managing their payments.
  • Use mistakes as teaching moments. It’s okay if your teen overdrafts their account — we’ve all done it. Take the time to explain the mistake and discuss how it can be avoided in the future.
  • Sit down for the college money talk. College is expensive, and budgeting is crucial. Before your teen leaves the nest, it’s only fair that they know what they’ll be responsible paying for. Talk to them about dining out, organizational fees, and the cost of social activities, as well as any loans that they might be responsible for paying back post college.

Grandma and grandpa’s roles:

Grandparents can (and should) play a pivotal role in teaching their grandchildren about personal finance! Get the scoop on extra special and fun things you can do as a grandparent.

  • Talk with the child’s parents. First things first — tell the parents what you plan to do with your grandchild. It’s important that your money values align.
  • Buy them their first share of stock. You can buy stock for your grandchildren at any age. When they’re teenagers, they’ll be ready to hear what the stock market is all about.
  • Consider paying interest on savings. They save, you pay interest (and you get your point across about the importance of saving) — it’s a win-win!
  • Share your experiences. Utilize the power of storytelling to talk about how you earned money growing up, what your financial situation was like, and what pivotal decisions you made in regards to saving.
  • Give the gift of education. Consider opening a 529 college savings plan for your grandchildren. Contribute a little bit each month or give on their birthday — either way the money grows tax-free!


Every child learns differently. Have you talked to your young ones (or teens) about saving and spending? If so, we’d love to hear what worked for you — share with us on Facebook!