Teach Your Kids to be Money Smart

It's never too early for kids to start learning about money. It's no secret that they don't learn a lot in school about financial management, how to budget, saving for retirement, or investing. While we know reading, writing, and math are important core skills, life skills like money management are important too, so it's going to be up to mom and dad to teach these concepts to their children.

If thinking about teaching your kids about money, budgeting, and saving leaves you scratching your head, you aren't alone. Money can be a very difficult topic in families. This can feel out of reach if you yourself are struggling with your finances, but I promise there is no better time to start teaching good money habits than, even if you are still learning yourself.

There are lots of books and resources out there to help teach kids about personal finance, but here's an easy (and free!) way to get your kids to practice saving and planning their spending. It's called the 3-jar method, and it is focused on teaching kids how to use money, when to save money, and the purpose of charitable giving. This simple concept can be a springboard to create lifelong money habits for your kids. 

Starting the Three Jar Method

If you aren't currently giving your kids an allowance, now is a good time to start. An allowance doesn't have to be big, but it can be the first time your kids get their own money to spend as they wish. Choose a sustainable amount and "paydays" similar to a job.

This is also a great time to have your children pitch in around the house to "earn" their allowance. Select age-appropriate tasks that are completed on a regular basis. They get to learn the value of work and earning money, while also helping to keep things neat and tidy.

With an allowance comes a big responsibility. This is where the jars come in. We need a spend, save, and give jar. You can make suggestions for how they should split their allowance or any other monetary gifts they receive. 

Spend Jar

• The spend jar is for money that the child can spend on immediate wants or small purchases.
• It helps them understand the concept of budgeting and making choices with their money.
• A good rule of thumb is for every $2 dollars that land in the spend jar, $1 needs to go in the savings jar. 

Save Jar

• The save jar is for saving money for a future purchase of a dream toy, experience, or those coveted sneakers.
• It teaches the importance of delayed gratification and setting aside money for future needs or desires.
• They also learn how to plan. If an item is $20 and they are planning to save $5 per week, they can do the math to figure out that it will take 4 weeks before they can purchase their item.
• If you are going for extra credit, you can include two savings jars. One for short-term goals and one for long-term goals. This is a great opportunity to expand on savings and how it works in real life. 

Share Jar

• The share jar is for money that the child wants to donate to charity or share with others.
• It encourages the value of generosity and teaches children about helping those in need.
• A simple rule is to put $1 in the share jar for every $10 your child receives,.

Setting Goals and Checking In

With a little guidance, your child will be able to manage their jars all on their own. It still is important to check in periodically, talk about goals, and see how they feel about budgeting. This can be a helpful time to talk around the harder issues with money that many of us avoid. Is there savings jar on empty more than it sees some green? Are they having a difficult time sharing or thinking of ways to give?

Kids, like adults, can struggle with budgeting. Putting in the work with them now can save them a lot of headaches later in life. 

Did you find this post helpful? Share with a friend and let us know how the 3 jar method is helping you and your kids be money smart.