Teaching kids about the basics of saving from an early age can make them smart savers for life. But savings lessons for your 2-year-old should be different than ones for your teenager. Here’s a framework to shape conversations with kids at every age:

Ages 2-4

During this youngest stage, kids learn the most basic financial skill of all: counting. There are many opportunities to teach about numbers, addition, and subtraction, just by using toys or items around the house. A piggy bank can be a simple way to introduce the concept of money and the idea of saving.

Ages 5-7

As your child enters elementary school, typically they are ready to grasp the concept of money as a finite resource- that much to everyone’s dismay - it doesn’t ”grow on trees.” Kids see parents pay for most things with debit and credit cards instead of cash which can make it difficult for them to understand the association between plastic and paper money.

A quick swipe of a card makes the process seem like magic because they don’t actually see money being deducted from your account and how it affects the family’s financial resources for other things. It’s important to take the time to explain how what you spend affects the decisions about what you buy and why. “You might start paying your child an allowance in cash so you have that physical transaction – rather than transfer the money into a savings account or buy your child a new toy.” says Erin Constantine, Head of Consumer Deposit Products at Wells Fargo.

At this stage, kids are capable of saving for short-term goals, such as a specific toy that they really want. “First have a discussion about how much the toy costs, whether your child will pay for all or a portion of it, and how he or she can save for it through allowance, extra chores, or birthday money,” Constantine says.

A piggy bank or see-through money jar can help them watch their progress. You might even put a picture of the goal and a progress chart on the refrigerator, where your child will see them often.

Ages 8-12

During this stage, kids are ready for longer-term savings goals. “It’s a good time to start making tradeoffs,” says Jodi Blackwood, senior vice president, National Wells Fargo at Work Director. “For instance, you could buy this doll today, or you could save your money for three months and buy the dollhouse.”

Kids at this age can also start learning the importance of saving for their future – making a habit of continually contributing to their savings and watching their accounts grow over time. Teach children the underlying value of saving, introducing the idea of a ‘rainy day’ fund for life’s unexpected events.

As an added incentive, help them establish a savings account with a bank; as an adult co-owner, you can log into the account online to show them their progress over time – the key is to teach them how to be consistent and establish good habits in their relationship around money. Each month, you can pledge to give them $1 for every $10 in the bank. So if they have $30 in their bank at the end of the month, you’ll give them $3 as a bonus. If they spend some of that and only have $10 in the bank, they will only earn $1.

Ages 13-15

Early teens might be ready for their own checking account at the bank. Constantine opened checking accounts for her kids at age 13 and suggests having the child bring her own debit card on shopping trips. This can also be the perfect opportunity to introduce the differences between needs versus wants – a valuable life lesson that they can carry with them into adulthood.

“I found that kids really want something at the store when the parents are buying it; if they’re buying it, they don't want it nearly as badly,” she says. “When my kids would bring their debit cards to the store, they were a lot more savvy in terms of whether or not they could live without that item.”

Teens of any age might be ready to learn about investing. Make it fun and tangible with online stock market simulations, which let kids practice choosing stocks and making investment decisions.

When Blackwood’s son was a young teen, he created a simulated investment portfolio through a virtual stock market game. “In his portfolio, he included investments in the brands he liked,” she says. “It taught him the risks and rewards of investments.”

Ages 16-18

As your child moves into the later teenage years, their savings goals will likely be much bigger and longer term. When your teenager sets a big financial goal like purchasing a car, work out a plan as a family. “Based on the kind of car your teenager wants, and how much he or she has saved for a down payment, estimate what the monthly payments would be,” Blackwood says.

For Blackwood’s teenager, that number proved unrealistic. “So we put some realistic parameters around how much we would contribute and what kind of car fit that price range and we also agreed that he would have to save $1,000 of his own money to contribute toward the down payment,” she says.

Demonstrate to your teen that saving is an important element in your life as well. “Have conversations around your financial investments that involve your teen – for example, how you’re saving for your teen’s college education,” Blackwood says.

Saving becomes second nature

By instilling behaviors from an early age and continuing to nurture them, saving simply becomes part of the ongoing interaction with your child. And early savings lessons create good habits that can last a lifetime, as Constantine found with her kids. “Ever since I started giving my kids an allowance when they were young, they had to save part of it and donate part of it,” she says. “By the time they got their first summer jobs, we had already established a savings pattern. Even though I’m no longer directly enforcing it, now they’re saving on their own.”

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