Nikki Waller, Director of Financial & Relational Development
Teaching your kids how to save money is one of the most valuable life lessons you can teach – but how do we teach them to save before they have an income? What if an allowance won’t fit into the monthly budget? How old do my kids need to be to understand saving?
The answers are easier than you think. We have a jar method (explained by Ben Joergens in the awesome video below). It can fit into your monthly budget if you have .75 a week, your kids can start as young as 3 years old.
In this report, researchers found that a child’s money spending habits are formed by the age of 7. So teaching your kids about saving money early can change their entire future.
3 Jar Method for very little money each week
This requires you to consider what your child is capable of and what you’re able to pay them. You’ll need to plan how they can earn an allowance in order for them to learn how to manage their money.
To prepare, I purchased three jars from the Dollar Tree – you can use any jars you have at home. I also printed these cute labels off of Three Little Monkeys Studio blog.
Don’t just give your child an allowance for existing – ask them to earn their allowance with a few easy age-appropriate chores. Next, set a pay-scale for chores – and we can make it very little. If you know you can’t afford more than $7 each week for an allowance, make sure your child can’t earn more than $1 per day.
This chore chart is based off a pay of $7 per week.
Make sure you verify the chores are completed just as your boss would verify the work is finished. Each payday, give your child their weekly earnings.
Personal Reflection: My 5-year old is learning that if she wants to make more money she has to work harder. So far, I’ve been able to pay her out of my coin jug that we’ve been collecting change in for years. I haven’t felt like I’m spending a dime, and my daughter thinks she’s getting rich with these pennies.
Your child will split these earnings into jars – Give, Spend & Save. I ask my children to split it evenly among the jars. Older children may want to fill their jars differently, it’s a discussion you should have with your children about what their goals are. What are they saving for? What do they need to spend? How important is giving?
Once the saving jar gets a little bit of money built up, take your child to the bank and show them how to make a deposit. Make a big deal about them making a deposit into their account and reward them for their self-discipline.
We can even take this a step further and encourage family members to make a small deposit into their account for their birthday. Or, even more rewarding, give a couple dollars to the kids for their birthday and let them deposit the money themselves.
Ben explains the entire method in this video and he also talks about saving for your children’s education in a way that fits into even the tightest budgets. Be sure to watch it for some great tips.