One of the main reasons I became a Financial Advisor/Money Coach is my kids. Only one of my three gained much financial knowledge in their teens and 20’s. My goal is to help other peoples’ kids achieve the “money sense” they would need to have a successful life. That’s why I volunteer with Junior Achievement. My recent class of fifth graders was a wonderful group.
I have written many times that one of the most important things we can do as parents is teach our kids about money. A good way to do that is to set the right example. Another way is to give them an allowance as a way to help them learn how to handle their own money.
This brings me to the Nine Jars story. I do budget counseling for Partners In Housing, a non-profit which provides temporary housing or rent assistance to those families who might otherwise be homeless. I recently talked to a single mom, let’s call her Tanya, who is having problems making ends meet. We talked about budgeting, and I mentioned, for future reference, the importance of allowances for her kids. At the second meeting Tanya said she has set aside 9 jars, three each for her 4-year old, 5-year old, and 7-year old. One jar will be for “wants,” one for “needs,” and one for “church.” I applaud Tanya for her idea and for actually doing something about it. Her kids will learn these valuable lessons:
One – You need money before you can buy things. Many kids think money comes from banks or purses or small plastic cards. They need to know you must have money and then you can exchange it for something you need or want.
Two – There is a difference between needs and wants. The child will learn to prioritize purchases.
Three – If you don’t have enough money in your jar to buy something, then you must save until you have enough money. Many adults still don’t get this concept. I recommend jars for these adults also.
I favor four jars: (1) buy something now. (2) save to buy something later. (3) save for college. (4) give to someone less fortunate than you. I suggest a minimum weekly allowance paid on the same day with no strings attached. Then there can be a list of extra chores for extra money. Let your child make decisions about his or her money and then talk about the result.
And, to repeat an important point, we parents must set a good example when we spend our own money. Your kids watch everything you do. Let’s start filling their jars!