As soon as children can understand a little about money, you can start to teach them the value of saving and the dangers of debt.
When they get pocket money, encourage them to save a little each week. Then tell them about bank accounts; make it fun, tell them “when you put pennies in the bank, then you get more pennies back.”
Explain about savings accounts and where they can find the best rates by checking newspapers or online. Explain how their money will earn interest. And especially tell them about the sense of security if they have some money saved.
You’ve told them the good news about interest on savings, now is the time to explain how interest works the other way ….. when someone is in debt. Tell them how interest is added …… and at a much higher percent than on a savings account ……. and how the debt can spiral out of control.
If you instil in your children the need to save, put some money aside, then they should be off to a brilliant start.
My son is 15 months old, and even now I am teaching him to save money. He has a piggy bank in his room, and he loves to put 5 cents into it and hear it hit the other coins. He enjoys hearing the sound of money, and each time we put money in, I tell him that we need to save money up so that we can buy things we want and need.
Thanks for your input! Great to hear your story, and a piggy bank is such a great way to start teaching children about money.