While there’s no shortage of things we can learn from our current health and economic crisis, taking this opportunity to promote positive financial habits is one of the most important lessons you can share with children in your family. For generations, introducing children to the concept of money and the value of saving is what parents and grandparents have been doing with piggy banks, big jars, and savings accounts.
Teaching children good money habits should begin at an early age with open, honest conversations. The traditional three-jar system is a popular method for helping young children learn about basic money concepts.
HERE’S HOW IT WORKS.
■ All money your children earn or receive is put into one of three money jars. The first jar is for spending, the second for saving, and the third for sharing with others. Here are tips for getting started.
■ Help your children pick out three large clear jars at the store (it’s important they see their money in the jars and watch it “grow”).
■ Decorate the jars with permanent markers.
■ Print “SPEND” on the first one, “SAVE” on the second, and “GIVE” on the third.
KEEP IT SIMPLE AND STICK TO THE BASICS.
■ Before any money goes into the jars, talk about the monetary value of currency and coins. Show the many ways different coins add up to a dollar.
■ Let your children have input into how money they’ve earned or received as gifts will be divided among the three jars. Discuss the importance of being consistent with their allocations each time. This teaches them that money isn’t just about spending it all on something they want. Consistently saving money and setting some aside to give to a charity or help others are important lessons to teach with every dollar your children receive. Remind them that no charitable amount given away is too small.
■ Allow them to use the spending jar for what they want—even if that means making some bad purchases.
■ Introduce the concept of interest by giving some form of earnings for keeping money in the savings jar. You could give a set amount at the end of the year, such as $1 for every $10 saved.
■ Offer to match any gift made from the giving jar. Let your children have input into the people or charities that will receive their gifts.
■ Have a “FAMILY EVENT” jar that you contribute to every week to show the children the act of saving for a special vacation or experience.
■ Keep children interested by giving different forms of money such as 50-cent pieces, gold or silver dollars, and bills in various amounts.
CHILDREN LEARN BY EXAMPLE—BE A GOOD ROLE MODEL.
Someday, their money jars will be replaced by wallets, bank accounts, and investment portfolios. But what the children likely will remember the most from this family experience are the financial choices you made about how to spend, save, and give to others—in good times and bad.
WHAT IMPORTANT FINANCIAL OR LIFE LESSONS HAVE YOU TAUGHT /WILL YOU TEACH YOUR CHILDREN OR GRANDCHILDREN DURING THIS UNSETTLING TIME? SHARE YOUR EXPERIENCE HERE.
The opinions and other information in the commentary are provided as of May 14, 2020. This summary is intended to provide general information only, and may be of value to the reader and audience.
This material is not a recommendation of any particular investment strategy, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified attorney, tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax or legal advice, and may not be relied on as such.
Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed, and is subject to change.
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