I’m a former college teacher, and one thing I noticed about many of my students is that they had no clue how to manage their finances. Some were spoiled, their parents dumping endless money into accounts for them to spend as they pleased. Others had never been taught how to budget and unfortunately racked up significant debt, quickly. I was bound and determined to raise my four children to know how to manage their money.
Here’s how we did it:
A monthly allowance
We tried doing a weekly allowance, which resulted in a lot of forgetting. We then decided that on the first day of every month, we would dish our kids an allowance with a designated amount for spending, saving, and giving. The kids never forget to remind us when it’s allowance day.
The jar system
My husband and I decided to use a jar system with our kids. Having a visual and being hands-on is important for kids, especially when they are younger. We got each child a purse and two clear glass jars. One jar was labeled for savings and the other for giving. Being able to place actual dollars into their appropriate jars and purse has been helpful to their understanding of having enough or needing more.
Spending
Our kids’ spending money goes into their cross-body purses. Whenever we go to the store, our kids are sure to bring their spending money along. When they find an item they want, we help them read the price and count their money. If they don’t have enough, they can’t get the item. They can choose something else to purchase or be patient and save.
Giving
Each child has a giving jar. They use this money for anything that is charitable, such as church or donating to a cause or person. They are welcome to give money from this jar as frequently or not as they please. In recent years, they’ve used the money to buy toys around the holidays to donate.
Saving
When our kids’ savings jars are full, we take them and their jars of money to the bank. This has led to important discussions about what a bank is and how it works. When they are old enough, they will have access to their own savings and checking accounts, and they can then begin to use money electronically.
Using a physical money system has offered us lots of hands-on practice with money
Understanding when there is none left is much easier when there is literally no money to touch. They’ve also had lots of practice counting money, estimating costs, and putting back items they can’t yet afford. Not only does this teach practical money skills, but our kids have learned about wants versus needs and the importance of giving to others.
Teaching our kids to manage their money has also cut down on any whining or begging for items they want. Our response is always, “Did you bring your money?” followed by, “Do you have enough money for that?” We put the ball in their court — which is both a great learning experience and empowering.
