Broker Check

Learning About Money

| January 24, 2017

For many children, once they get their little fingers on some cash there’s only one thing they want to do- Spend it! Our View: Children will benefit from learning all the options available to them when it comes to money; aside from the instant gratification they might feel after splurging on stuff. 

Teaching your child, or grandchild, how to set goals and delay gratification takes time, but many financial experts believe that implementing the “Three Jars” system for dividing cash helps make the task easier.  

“Three Jars” is just that! Three jars labeled Save, Spend and Share.

1. Save -  Money in this jar goes toward saving for a large item, such as a toy or an event. If he or she has a savings account, take weekly or monthly trips to the bank, have them deposit their save jar cash and show them the growing balance on the transaction receipt.

2. Spend -  Money in this jar goes toward regular spending. It can be key for your child to delight in smaller purchases to keep them patient while waiting for the save jar to grow.

3. Share -  Money in this jar goes toward a charitable cause or someone in need—of your child’s choosing. It’s helpful to choose a charity that offers some type of tangible interaction or feedback to help keep your grandchild excited; such as a local branch they can visit, or pictures showing how donations are used.

Help guide your child or grandchild as they decide what percentage of his or her allowance will be allocated into each jar! Cutting out pictures from magazines together that visually reinforce what each jar represents and sticking them to each will help remind about goals. 

As your child gets older, you can add a fourth ‘Invest ’ jar that they can use to save money toward much larger investments, such as a car or even college. One idea to help motivate is to match the money in the jar dollar-for-dollar—place your match in a Roth IRA or 529 Savings Account in your child or grandchild's name.

If you’ve used this type of budgeting method with your child or grandchild before, we’d love to hear how successful it was!

We hope you enjoyed the view!

Your friends at The Timberline Group