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# How To Teach Saving Money To Preschoolers

By: Carmen Grant

Break Studios Contributing Writer

Every parent should know how to teach saving money to preschoolers. Preschoolers are at the age where they can understand basic logic and want to learn practical things. Learning to save money is a vital life skill that needs to start as early as possible. A child that understands how to save early on will be more successful at saving as an adult and will have a solid personal finance foundation.

1. Start with the classic piggy bank. Preschoolers love putting coins into piggy banks. At this age, children enjoy solving puzzles, and getting a coin to go into a skinny slot is just that. Give your child as many coins as you can find, and have them put their coins in their piggy banks daily.
2. Cash out the piggy bank. When the piggy banks gets full, take out some of the coins, and have your preschooler help organize a few coins. Don't take all the coins out, this can be too overwhelming for the child, and for you. Use this as a learning experience to differentiate between pennies, nickels, dimes, quarters, and dollar coins if you have them.
3. Explain how much each coin is worth. Understanding the amount each coin is worth might be a little advanced for the younger preschoolers, but four and five year olds shouldn't have any problem with it. Line up the coins and show them how much each is worth in relation to one dollar. When they see that it only takes four quarters to make a dollar, yet ten dimes to make a dollar and one hundred pennies, it will show them the relative value of each coin.
4. Take the coins to a coin machine. Take your child and his or her coins to a coin machine. Preschoolers love being able to toss the coins in and hear the machine clink away. You'll love seeing home much the coins will add up to be. The fun for the kids is in participating in this basic task. Most banks now have coin machines that do not charge a fee for processing your coins. However, if your bank does not have one, many stores have CoinStar machines that charge anywhere from eight to ten percent per use.
5. Put the money into the bank. Once you have successfully cashed in all of the coins, head to the teller and put the money in your child's savings account. The beauty of kids accounts is that they don't charge any fees so long as a minimum balance, \$5-\$10 is always in the account. While your first instinct might be to use the money to buy your child a reward for saving, this leads to the habit of always spending what you save. This is the opposite of what you want to do since it is teaching how to spend instead.
6. Keep it simple. Above all, teaching money saving tips to preschoolers should be easy. Piggy bank, sorting, depositing. Once they know the process, they will be more interested in helping and will relate to saving as a normal everyday thing that has to be done. Saving will turn into a wonderful habit.
Posted on: Apr. 28, 2010