I met with a financial adviser a while ago, and when I found out he had a son a couple years younger than mine, I asked if I could pick his brain a bit. First, I asked if he gave his kid an allowance (yes), how much (eight quarters a week), and what he was expected to do with it.
I liked what he told me, so I decided to implement it at home.
My son, having just turned six, gets six dollars a week. I budget for it as part of his $100 monthly envelope.
The main idea here is that the kid gets three jars, labelled “spend”, “save” and “share”, respectively. I saved up some empty protein powder jars because they are huge and I’d like to give him room to fill them, should he want to. We decorated them with stickers.
He gets his allowance in change, loonies or smaller. The rule is that he has to put one dollar in each jar every week, but he gets to choose where he puts the other three dollars.
The Spend Jar is pretty self-explanatory. This is for stuff he wants to buy. There is still an element of saving required, since most things cost more than a few dollars. He’s keeping a list of items he wants and their prices, and learning about sales tax.
The Save Jar is for long-term savings goals, like an expensive toy or a trip. Eventually, some of this will go into a bank account.
The Share Jar is my favourite. This is money he has to spend on others. It can be used for birthday gifts for friends, or Christmas gifts for family, or donated to charity. He’s got plenty of ideas already.
This week, the extra three dollars went right into Spend. He saw this silly calculator at Staples last week with a ball bearing maze in the back of it, and it’s all he’s talked about since. I was kind of hoping he’d get over it, but no luck yet.
He’s pretty proud of his jars, and I think it’s an easy way to teach budgeting in an age appropriate way. I’d love to hear your thoughts.
What other lessons in financial literacy do you think it’s important for kids to learn? Or do you think kids just shouldn’t have to think about money at all?