Teach Your Kids How To Save, Spend, Share Responsibly

6:15AM | October 30, 2009 | comments: 3

How do you teach kids to be financially responsible with money?

One man created www.ThreeJars.com. It's a modern allowance system that lets kids earn, track and use their own money. He also adds a giving-back component to the whole thing.

Anton Simunovic is a father of six. He started with his own kids, then kind of grew it from there.

" We make it very easy," said Simunovic (SIM-ooh-NAH-vic). " It starts with the parent. We have a 90-second sign up online. Upload your child's picture to your own personal site and get going. Parents decide how much allowance to pay their child and what percentage of that allowance should be allocated. He urges parents to keep it balanced between three 'jars'.

" Allot a portion of every dollar your child earns to three 'jars': one for saving, the other two for spending and sharing. 50% to the SAVE jar, 40% to the SPEND jar and 10% to the SHARE jar is a good rule of thumb. This establishes healthy money patterns."

Be consistent. Pay the right amount on time. "Consistency is a super important thing," says Simunovic, "It's one of the most difficult things for parents generally. It's doubly so with respect to allowance. Parents might think a few dollars is kind of trite and cute for the kids and 'Oh, I'm so tired this Friday night, don't bother me for my allowance,' It's your child's only source of income! If you're looking for kids to be responsible with money, give allowance the due credit it deserves."

Also, he says, when kids spend their own money and not ours, they get thoughtful-and fast!

How much? " Consider the age of your child, your expectations of what
the allowance will be used for, and what your family budget can afford. Before high school, kids are often paid their age or half their age in dollars per week," says Simunovic.

Should allowance be tied to chores? Of the 13 million families in America that pay allowance, half believe allowance should be tied to chores. Consider telling kids that everybody in the family has to help out. If they don't, losing TV, internet or cell phone privileges is much more
effective. " Of course kids need to do chores at home, everybody who lives in the house has to contribute to the home. Everyone must chip in," he says, "but when it comes to allowance, it's the best tool a parent has to teach kids about money. So use allowance effectively in your family. Before they leave the family nest, don't gum it up with things like did you make your bed today, money is too important an issue for that."

Why a share jar?

" We have a share jar," according to Simunovic, "because what we have found is, when kids think about sharing it, it tends to take away some of the energy about spending their money. We've received comments from around the country, from kids that have shared some of the money and seen the impact of those dollars. They have felt very powerful and good about sharing some of that money and that fundamentally leads to better self esteem.

Even if kids don't share money, the ThreeJars.com corporate entity, shares. So kids still end up sharing, albeit indirectly. The corporation donates monthly.

Almost all kids want to just spend their money. The important thing to point out is they automatically learn to save on a site like ThreeJars.com.

The key thing if you want your child to be responsible with money is to empower them.

It's really important that they're empowered. "To be empowered means to make decisions," said Simunovic. "When you make decisions you understand the consequence of your actions. By tracking those consequences, kids develop healthier habits in the short term today with small amounts of money, than making much larger mistakes later with larger amounts of money.

"Learning these tools can act as a financial compass for your child, for life, if it's done effectively.

"If you want your child to be responsible with money when they leave the family nest you need to give them an opportunity to practice using money today, when they're still open to those financial concepts. Studies show that kids are more open to those financial concepts before high school, before peer pressures kicked in, before negative habits kicked in. Start em early, they get these healthy habits, they carry them forward for life."