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How To Teach A Child To Save Money
The Money Jars
You will need to acquire 4 jars. These jars will be the basis for this lesson in money. Label the first jar "now". We are going to say our child that is learning this lesson is named Billy. Little Billy received $10.00 for his weekly allowance. Now split the money three ways. I realize there will be a penny left over. Put $3.33 in the now jar. That Billy's and he can spend it any time he sees fit to do so.
The next jar is labeled "savings". Place $3.33 in that jar. This is money that Billy is learning to save for a bigger purchase. Maybe a really cool toy or book. This money will accumulate. At the end of the month Billy may access this money to spend or keep saving. If Billy decides to spend the money he will have saved $13.32 to spend at the end of the month. If Billy saves this money for a year he will have $159.84.
The third jar is labeled "charity". This jar also gets $3.33. This jar is money Billy can spend to buy a gift, give to church, or pursue any number of charitable things. This money will help to teach little Billy just how important it is to spend our money wisely.
The 4th jar
For those playing the home game you will recall I mentioned four jars. The fourth jar is labeled "earnings". This jar will help teach the importance of earning money as opposed to having it given to you. Through the week you may have extra chores for your child. Maybe you give them $10.00 to cut the grass, or $5.00 to walk the dog. This money goes in the earning jar. At the end of the week when you give Billy his $10.00 allowance he will be able to open his earning jar. The money inside is his. He can spend it, save it, or put it in the charity jar.
You may be surprised to learn after a few weeks Billy is putting more and more money into the savings jar. This is exactly what you want to happen. If you follow these simple steps and make use of the money jars you will teach your children the value of a dollar as well as how to handle their money a lot better. Segmenting their allowance may seem a bit crazy at first but after a very short while you should see great results.