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Financial Education for Your Kids Through the Four Jar Method

Author Bio : This is a Guest Post by the Webmaster of We Redefine. He provides valuable tips on many topics, such as money savings, investment & debt relief.

We can never underestimate the importance of money management. An individual who understands how to use money wisely is unlikely to get into debt. Most people learn money management at the cost of heart-wrenching experiences. They could have avoided monetary loses and debt if they had exposure to financial lessons at an early age. So how about teaching your children some money management skills? They would thank you profusely for this when they become grow up.

A smart way to teach your children money management is through the four jar allowance method. But what exactly is the four jar affair? Alright, let’s discuss in detail.
The four jar method is a very popular way to teach children how to get wise with their money. Here you teach your kids to keep their allowance in four see through glass jars and spend their money in an organized manner.

The money that you give to the kids is to be kept in four jars. Make sure that they “earn” the money. This will increase their attachment with their hard earned money. Assign a relatively easy task to the youngest kid and allot harder tasks for the older ones. Remember that the money is to be paid at a specific time every week. These small things are important because they have an impact on the young mind.
Ideally the four jars should be on the alms-giving, the spend-as-you-wish, small time savings and big time savings. Check out the details:

The alms-giving jar: Children catch the concept of charity quite easily. So you won’t have any problem to make them understand that a part of their allowance should go to charity. Approximately 10% of the money should be used for the benefit of the poor and the needy. However, you need to supervise the disbursal of charity funds for the first few days because the young children may not understand the importance of helping others. This is not the age for someone to understand that they are luckier than most other people.

The spend-as-you-wish jar: Let your kid feel free to use the money kept in this jar to his heart’s content. Of course there are some family rules. If comic books are not allowed for kids in your house, then he cannot buy them. If junk food is too bad for your child’s health then he must not have them. However, give the kid some freedom. Let him choose what he wants if it’s not anything objectionable.

Small time savings jar: Your kid wants a toy from the local shop. But he hasn’t got the money. Let him save the money for a couple of weeks and then buy it. Instant gratification is a major problem with the current generation. It has pushed millions of people into debt. With small time savings jar, you are teaching your kid the value of patience. Once he develops this habit, he would know that there is a right time to buy everything.

Big time savings jar: Let your child have a taste of investment. He should not spend the money in this jar at least for a year. Initially, this will frustrate him but eventually he will be happy. This will become a habit with him and the glass jar will turn into a bank account one day and soon enough the bank account will turn to bigger investment schemes.

Some habits are needed to be developed from a young age. Financial discipline is one of them. This can be successfully done by introducing the four jar method to your kids. So think about it this Christmas.

1 comment:

  1. I like the 4 Jar Method that Marc describes here - a nice variation on the 3 Jar approach which tends to lump the Spend-as-you-wish and the "Small Time Savings" together.

    If the physical jars run out of steam, you can try one of the online sites like ours to manage it. Here's what Marc's setup would look like in FamZoo: