If your kids are like most, any money you give them burns a hole in their pockets. This isn’t that different from most adults, come to think of it!
As parents, you want to set your kids on the right money path as soon as possible so they learn the value of saving and giving – as well as the fun of spending. Around the age your child begins either preschool or kindergarten is probably a good time to start with the three jars method.
You can probably tell from the name, you’ll need to get three jars. Three pint-sized Mason jars and work with your children to decorate them as they see fit. The only requirement is that you label them Save, Spend and Give. Feel free to make a slot in the jar lid, buy the lids already slotted or just open the jar for every deposit.
Now it’s time to determine an allowance. While many parents feel allowances teach children the wrong lessons, we feel this exercise is just what a child needs to learn money basics. If you’re dead-set against allowance, use the three jars for birthday money they receive, etc. The standard rule of thumb for allowance is a dollar for every year. So, if you’ve got a 6-year-old, you give them $6. Whether that’s weekly, bi-weekly or monthly is up to you.
Once you’ve figured out the allowance, you divide that number by three and have your child put it in the jars. Using our above example, the $6 would be $2 per jar. Kids immediately understand the spending part of the exercise, but you’ll need to work with them on the Save and Give parts.
Keep Them Motivated
It may help motivate your child to save if you work with them on goals. Is there a bigger ticket item they’d like such as a video game or stuffed animal? Get a notebook and write down the price of the item and then track how much is in the jar with each deposit to show how close they’re getting to their goal.
For the Give jar, let them do the research into where they’d like to donate their money. Do they love animals? A local shelter would be a good choice. Do they want to help out other children? There are plenty of shelters or medical-based charities to choose from. Decide with them how much each donation should be and keep track of that number as well.
Depending on how old your child is and how well the three-jar exercise goes, you may want to progress to a savings account after six months or a year. That way they can learn about the benefits of interest as well as saving! Plus, WWFCU has youth savings challenges and raffles to help make savings fun. No matter how you proceed, you can be happy knowing you’re teaching your child valuable money lessons.
To learn more about our youth accounts, stop by our branch or call (734)721-5700.