Teaching children about money

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There was a time not long ago, when it was part of everyday life to think intentionally about saving money. There was a regular school banking programme which encouraged the children to bring their 20 cent coins each week and watch their money grow.

Nowadays, we seem to have lost touch with that form of saving. Along with it, our children have missed an opportunity to develop patience, self-control and the delight of anticipation. Take Mike and Sara. They were beginning to feel dismayed at their children’s attitudes. They came from a reasonably privileged background so they were able to meet all the needs (and many of the wants) of their three children, aged 5, 8 and 12. But they struggled to get the children to help around the home. There was way too much bickering and what was especially discomforting, was a growing sense of ‘entitlement’ that had crept into the family atmosphere.

There might be several ways to get to the roots of these problems. One way that has proved helpful to develop a sense of respect for teamwork and privilege in many families, is to give children skills, values and insights around thrift. Done wisely, teaching your children about earning, saving, giving and spending wisely also reinforces the virtues of delayed gratification, good judgment and the delight of giving to others. As they come to learn the cost of things, they will come to appreciate their value.

Mike and Sara heard about the ‘three jar system’. It would require three jars per child, a family talk and the commitment to giving each child a regular amount of pocket money. The family decided to give it a go. The talk went like this – “We are a family that wants to be known as reliable, as well as generous. It hasn’t been working out that way lately, so we are going to introduce a system that helps us to develop those qualities. Each child will receive a certain amount of money each week, more if special jobs like washing the car or cleaning the windows are done. Each of you will get three jars, and you can decorate and label them yourselves in your own style. The three jars will be for saving, spending and sharing.”

How it works

Each week, pocket money was paid out in coins, and the children were helped to divide the money into the appropriate jars. You can fine-tune the process to suit your circumstances. For instance, Mike and Sara chose to divide the money equally into each jar, a third into each, but you might decide otherwise.

Each jar is for a different purpose

One for saving

Children put regular amounts of money into this jar, but can only spend it with special permission from parents. It might be for an event, a toy or an activity they want to do, or perhaps there will be a savings target, with an extra bonus being paid if they reach it (interest!). You may decide to bank this money as it grows and earn real interest, or parents may decide to subsidise saving to give a real incentive.

One for spending

The money in this can be used for special treats that they might want that week – maybe an ice cream, or entrance into the pools.

One for sharing and giving

This money goes towards presents for friends and family, towards a sponsored child, to a charity or into the offering at church.

It took this family a good deal of organisation to get underway but the positives were worth it. In an increasingly cashless culture, it seemed a little inconvenient to get all the coins together each week, but one of the keys to the success of this system is the visibility of the cash.

So many of our transactions are made with cards that, because the money isn’t seen, children have trouble connecting with its value and the fact that it is earned. (How many of us have been instructed by our children to, “Just go and get some more cash from the money machine?”)

Eventually, there was a real reduction in the, “Can I have one of those?” requests. Mike noticed how the children were becoming great at reminding each other to check if they had enough money for a purchase and not to ask parents for it. The best part was the increased awareness of others. Each child thought quite carefully about who they wanted to give to, and how much. And the two eldest carefully worked out how much money they would need for family presents.

Tips for success

  • Have a set day and time that pocket money is given out each week.
  • Guide young children with the amounts to set aside in each jar. As they get older, let them make independent decisions.
  • Allow children to make mistakes. If they spend all their money, don’t be tempted to top them up with more money.
  • It’s their money, but they are your children. If you don’t think that your child should spend all his pocket money on a two-litre bottle of soft drink and then drink the lot, you can say so.
  • Celebrate their success. If they have waited and saved carefully – praise them. They are on their way!

Family Coach Jenny Hale talks about teaching children about money

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