Yes. Money jars. Here’s how some basic items in your kitchen cupboard can become your child’s first introduction to budgeting.
Once your child has an allowance, give them 4 jars (coffee cans or plastic containers work too) labelled Charity, Quick Cash, Short-Term Goals and Long-Term Goals.
Pay allowance in single dollar bills (or coins) so that it is easy to divide into jars. Working together, decide how much should be put into each jar, depending on your child’s short and long-term goals (going to a movie with friends vs. a new bike, for example)
Empower your child to make choices when it comes to putting money in the jars. They could choose 10% each for charity and long-term savings and 40% for quick cash and short-term goals. Or, they might want to deposit 20% in their charity jar and divide the remaining money equally among the other jars.
Also, resist the temptation to bail your child out if they run out of money in a particular jar. Let them experience the natural consequences of spending.
Learning to budget is an important skill. If you teach your children how to budget now, they will be more prepared for the real world when they become adults.
Here are some other ways to teach kids how to budget:
- Send your older kids to the grocery store with a fixed sum of money and a shopping list. Tell them that they need to buy everything on the list, and can save any money left over.
- Let your child use their own money to pay for small expenses and ask them to check that they get the right change at the checkout.
- Give a fixed amount of spending money for family holidays. Work together to decide how much they can afford to spend each day to avoid running out of money.