How to introduce children to the concept of saving money

Children need to learn about money as early as possible. Spending and saving habits develop early, often by modeling behaviors children see in their parents. Even Sesame Street has been touting the importance of developing good financial habits by encouraging separate 'accounts' for spending, saving and sharing. If you are interested in encouraging your child to save, follow these simple tips.

Start money jars for saving, sharing and spending. Children love money jars. They're visually exciting because you can actually see the money "growing" when you add more to the jar. Most children need visual reminders of what they're saving for. Help your child choose a savings goal like a special toy, and put a picture of the toy on the jar as a reminder of what he or she is saving toward. Keep in mind that children have shorter attention spans when it comes to savings. Their savings goals should be no more than a month or two until they develop a strong sense of duration of time.

For older children, consider the family 401K savings option. Just like an employer matching an employee's contribution toward their retirement savings, the family 401K works by the parent matching the child's contribution to savings. Before implementing this technique, though, parents need to set some ground rules as to how long the money must remain in savings to receive the matched amount. Otherwise, older children and teens may learn how to play the system to get more money when they have no intention on saving it long term.

If you'd like to take a more hard-nosed approach to teaching your children to save, you can always implement a rule that a certain amount, like 10 percent, must be saved every time your child earns or receives money. While they'd preferably make the choice themselves, some children, especially tweens and teens, may need the decision made for them to see its value later.

What are your tips for getting kids to save money? 

Photo courtesy of Hobbies on a Budget via Flickr.