One of the most important rules in teaching your kids to save is to start early. Even from very young ages children receive money from grandparents, aunts and uncles, family friends, etc. Start a separate bank account for your child immediately. When your child is too young to spend the money for themselves, put all the money they receive as gifts into this account. When they are old enough to know what money is all about, it will give them a boost to know that they already have something to get them started. Also, you are being the savings role-model for them to follow and it shows that you are serious about the importance of saving money.

After your children are old enough to know what money is all about, make it a rule that any money they receive as gifts should be split. Part of that $10 that Aunt Ruth gave them for their birthday should be put aside into their bank account as savings (say a percentage of about 20% or $2) and the rest they can spend. Make the percent amount a constant on all money they receive, so if they get more ($25) then 20% of the $25 should be put aside. The child still gets the fun of spending most of the money as the gift was intended to do, but still learns that putting aside some of it is a requirement.

Show your child their bank book from time to time so that they can see the amount in it add up. They will be proud to see what they have accomplished.

Make it known that the bank account is for their future, not for the simple things that are presently on their want list. If they want a particular item that costs a lot, show them how to save for it outside of their bank account. Take them to the store to price the item (say it is a particular pair of running shoes that cost $120). When they receive money as a birthday or holiday gift of $50 from Uncle Joe, have them put the 20% into the bank account and the rest into a jar or piggy bank beside their bed. Then when Grandpa gives them money, the 20% again goes into their bank account, and the rest is added to the jar, and so on until the required amount for the shoes is obtained.

Encourage your children to get a job. Even young children can have chores to do around the house that you can pay them for, like taking out the garbage, sweeping up, raking leaves, cleaning the bathroom sinks, etc. The amount of the pay would be up to you. When they are very young, don't focus so much on the perfection of the job, but more on the requirement of them having to do the work in exchange for money. This teaches them responsibility for household chores as well as teaches them how to make and save money. Again, the 20% would go into their bank account and the rest they could spend.

Another way to get them to earn and save money is with your child's schoolwork. I know a lot of people don't agree, but isn't a child's job to go to school and earn good grades? If it is like an adult job, then encouraging them to get better grades by paying them for the level of grades they get is the same as an adult being paid for their accomplishments at work. So you could encourage your child to get better grades by paying them, say, $5 for every "A" they receive, $3 for every "B", $2 for every "C", etc. This not only encourages them to achieve better at school, but also gives them some more money into their bank account. The same 20% rule would apply.

Talk to your children about the importance of saving, and teach them the value of money. When they are old enough, probably in their early teens, have them read a book about the value of money. There are many good books out there on the subject. Pick one and have them read it. Then make up a simple test and test them on it to see how well they understand the important points. Again you can pay them for the results, 50¢ for each right answer, to ensure that they will actually read the book.

When your child is old enough and you deem that the time is right, you can turn the bank account over to them. This could be when they are starting college, when they are getting married, when they need a down payment for their house, or simply when you feel they are mature enough to handle it. Having this savings account could help them out a great deal in their future. But it like the old saying that says something like giving a hungry man a fish to eat today it a good thing, but that teaching him to fish is better. Giving your child the money they have developed in their bank account is great, but teaching them how to increase that amount is invaluable.