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As a parent, you hold primary responsibility for training your children in the skills they'll need as adults. One of these major skills is saving money, and if you start early, you can ingrain principles and habits in your kids that will give them a strong financial footing for their future. Many problems with debt are the direct result of not knowing how to save money well, so teach your kids about saving from an early age.

Basic principles

As soon as kids understand what money is, they'll be ready to learn what they can do with it. It is your job to discuss with them the concepts of spending versus saving. Talk to them about how every time someone wants to buy something, he needs to have enough money for it. Because some things cost a lot of money, you might not have enough if you did not save some of the money you got before.

Your kids will be a lot more likely to take hold of these principles if you are practicing them too. When you make a big purchase, like a family vacation, talk about how you had saved up for it. You can even discuss saving when they ask for something you cannot afford, and you tell them they cannot get it because you are saving the money for a particular purchase.

Earning interest

Saving money under the mattress, in a cookie jar, or in a piggy bank is not the best way to do it. Kids should understand that they can earn even more money on the money they are saving. This concept is at the foundation of retirement savings, and even if you do not frame it in that context, it is still valuable for your kids to learn.

Help your child understand what it means to earn interest by helping them open a savings account at your local credit union or bank. Many banks or credit unions have accounts designed specifically for children that yield relatively high interest rates on their low balances, and don't charge any fees either. Make a habit of looking over the account statement with your child each month so she can see the interest deposits and watch the money add up. Older kids can also learn about earning interest through certificates of deposit, bonds, and other long-term investments.

Saving up to buy

Help your kids put all of these principles into practice in their lives by encouraging them to save up to buy the things they want. Help them research how much something will cost and make sure they have a place to put saved money. Then, every time they get money, whether from an allowance, working or receiving it as a gift, ask them how much of it they want to save for the item they plan to buy.

This works for everything from small toys to bigger items like electronics, special trips, a car, and college. Hopefully, as your kids get age, they'll start applying the principles even without prodding.

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