Having your children learn the simple concept of telling their money where to go instead of wondering where it's gone helps create a great money habit that teaches effective money management.
Children need to handle money to see how it feels, to see it build up and what it feels like
when it is all spent.
Your money has three different jobs, being saved for others, for the future, and being spent on needs and wants. Putting pocket money into three named jars - Sharing, Savings and Spending - is a great way for children to learn that in order to be financially well you need to tell your money where to go instead of wondering where it has gone.
Sharing jar
Sharing can be done in many ways and could be in the form of a donation to your favourite charity or supporting a child in a Third World country. It could mean helping a neighbour to buy groceries, spending time with someone or paying for someone else to attend a special event. Teaching children to give teaches them to think of others instead of focusing solely on themselves.
Savings jar
You can divide this jar into two basic categories, short-term savings and long-term savings. Whether you use two separate jars or two bank accounts, it is good to keep big object savings or long-term savings separate from short term savings.
Put money into the bank for safekeeping from the savings jar when it reaches an agreed amount. It can be a good idea to replace the money with something such as a marble for each dollar they had in the jar, so they can visually get an idea of how their money is building up when money is being added, or going down when money is withdrawn from the bank.
Spending jar
This is an amount your child can spend on themselves or others. Do not rescue your child if they spend all their money from their spending jar and want to buy something else. It can be a very valuable lesson - when the jar is empty, it is empty. Letting your child borrow from you until next pay day is only teaching them to spend more than they earn.
These principles above apply equally to adults. You need to tell your money where to go instead of wondering where it went!
Sylvia is the author of How To Stop Your Kids Going Broke and the New Zealand Household Budget Kit. Both are available from
www.silbo.co.nz
Teach kids how to track spending
Having your children learn the simple concept of telling their money where to go instead of wondering where it's gone helps create a great money habit that teaches effective money management.
Children need to handle money to see how it feels, to see it build up and what it feels like
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