This is a guest post from Melissa. Melissa and her family are learning to live a fulfilling life on less as they live on one income, pay down debt and raise three little ones, ages 7, 2 and 1. She blogs at Mom’s Plans and writes about money saving tips, family, and cooking.

When I was a kid, I earned an allowance and spent the money as fast as I could get it. When I was able to work a part-time job as a high school student, I was responsible for buying most of my own clothes, making my car payment, paying for gas and buying car insurance.  Still, as most teenagers do, I had extra money even after those expenses, and I rarely saved it.  Instead, I went to the movies, went out to eat with friends, wasted gas by driving my car past boys’ houses. . .

I had a few friends whose parents required that they save a portion of their earnings for savings or for college.  They would complain about the injustice, and I would commiserate.  I was happy my mom didn’t impose those rules on me.

Now, I look back and wish that she would have. She could have taught me solid financial discipline, something it took me years to learn.   I have three kids of my own now, and only one of them, my seven year old, is old enough to deal with money in a tangible way.

My son has chores, and if he does all of them and maintains a good attitude, he can earn up to $1.25 a day, or $8.75 a week.  That can add up to $455 a year, which is amazing money for a seven your old.  However, he has two problems.  First, he doesn’t really like to do his chores, so he usually only earns 25 to 50 cents a day, and there are plenty of days where he doesn’t earn anything.  Of the little money he does make, I have him put aside some for donate and some for save.  The rest flies through his fingers on items like envelopes.  I kid not.  He spent $2 on envelopes!  He loves to build complex Lego kits, but he can’t manage to save the $10 it costs to buy a small one.  He just can’t delay gratification that long and ends up squandering his money on small items.

I recently heard an expert, I believe it was Suze Orman, suggest that parents should consider motivating their child to save a portion of their money by matching what they save. I have implemented that with my own son.  For every dollar he saves in long-term savings, I match him .25 cents.  So, if he saves $100 over the course of the year for long term savings, I give him an additional $25.

I also decided to do something like this for short term savings.  If my son is saving his money for something that takes more than a few weeks to buy, such as a Lego set that costs $12, I will match him .10 for every dollar he saves.  It is not a lot, but he is starting to appreciate getting extra money just for saving.

Some people argue against this strategy, but I see it as teaching my son how things work in the real world.  If I am saving for something I want in a year, I keep the money in a savings account and earn interest (though not much in this current economic climate!).  If I save for retirement even though I would like to use the money now and my employer matches my contribution, I earn 100% on every dollar saved.

Because I am matching his savings, he learns that it is worthwhile to delay spending because you can actually earn more money by saving.  Paying my son interest is a small amount to pay to teach him good fiscal habits that will last him a lifetime.

What are your favorite ways to motivate your kids to save?


  1. Hunter @ Financially Consumed Reply

    I use Suze Orman’s approach. Offering a savings match has worked for us. We also encourage (strongly) the kids to save a portion of each allowance. They’re getting it, I think.

    • @Hunter – That’s a really good approach. If you’re kids are saving some of their allowance, then they’re getting it!

  2. I think the child’s personality has a lot to do with it. We had one child who was a born saver and another who was a born spender. We never gave them expensive gifts. If there was something that they wanted badly enough, they would have to find a way to save for it. Often we would offer to pay a certain portion of the cost and they could work and save for the rest of it. We continued this practice throughout their childhood years and also as a means to finance college. This technique worked well for our family. They both learned the values of hard work and saving money.

  3. We had a standing rule that our kids had to save half of any money received including allowances. I gave them additional motivation as they became teenagers that I would match any savings toward purchasing a car. My children are adults and are savers. They do not have debt except for mortgages.

  4. I have been thinking about teaching my son how to be more responsible with money and these are some great tips! I don’t see anything wrong with matching savings funds. In fact, many employers do that as well.

    Thanks for sharing!

  5. I been teaching my kids how to save money the traditional way.. The piggy bank! Thanks for this new ideas to teach them.. Keep it up!

    • @Raven – Piggy banks are still a great motivator. Watching the piggy fill up or get heavy is a tangible thing that can motivate them to save more. Mason jars work great in lieu of piggy banks, especially since they are clear.

  6. My University Money Reply

    I really love the idea of matching savings. One of the first really insightful suggestions I’ve heard. I’m also a big fan of implementing PF lessons throughout early, middle, and senior years, and a mandatory course in high school.

  7. I don’t see how that approach is any different from paying interest on their savings. More importantly, if it works, why rock the boat?

  8. Nancy Phillips Reply

    I enjoyed your post! The GISS (Give Invest Save Spend) bank is another great way for children to develop strong financial habits and is based on the research and work of financial authors including Robert Kiyosaki, T. Harv Eker and Dr. Thomas Stanley. The children benefit from not only learning how to save but experience the joy of giving and preparing for the future.

  9. Nowadays, saving money is very difficult because of our economic problems in our country. Encourage your children to save money. Instead of going to a restaurant everyday, go only in special occasions and teach your kids to budget their money. Thanks for sharing!

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