To encourage a spending plan, give the child bills in small denominations. Short-term savings can be kept in a bank. To visualize a savings goal, tape a picture of the object the child wants on the side of the bank. For long-term savings, consider opening a savings account in the child's name. This also will help your child learn how to fill out a deposit form, withdraw money and balance a bank register.
Older children can learn about compounding interest and how it makes their money grow.
Parents can match the amount that their child saves. Financial experts advise that parents be open with their child about the family finances. Talking about the family budget, savings and investments provides a good example for young children. Also, when a financial milestone is reached, such as saving for a family trip, children will be aware of the steps taken to achieve that goal. Finally, discuss what money can't do.