Having your children learn this simple concept of telling their money where to go instead of wondering where it’s gone helps create a great money habit that teaches effective money management. This will eventually lead to financial prosperity. It is important for your child to actually “handle money” to see how it feels, to see it build up and what it feels like when it is all spent.
Putting your money into three named jars Sharing, Savings and Spending (for children) or named bank accounts for adults is a great way to tell your money where to go you instead of wondering where it has gone! Your money has three different jobs. Sharing it with others, saving for the future, and spending it on needs and wants.
“Sharing” jar. There is a Universal Law (you reap what you sow) that works like this: if you give something away, it comes back to you multiplied. It may not come back to you in the exact form you gave it, but rest assured if you sow goodness it will be returned to you. Sharing can be done in many ways and could be in the form of a donation to your favourite charity, support a child in a third world country, church, helping a neighbour to buy groceries or paying for someone else to attend a special event.
“Savings” jar. 
You can divide this jar into two basic categories, short-term savings and long-term savings. Whether you use two separate jars or two bank accounts, it is good to keep big object savings or long-term savings, (eg new house or investment) separate from short term savings such as a new bike, a special family outing, holiday, new car or “JIC money” (just in case money). Think about what it would be like to have three or six months of living expenses in a separate bank account. This would buy you some time if you needed to reassess where you were going in life or where you wanted to go.
“Spending” jar
This jar is for all your living expenses and covers all your “needs” and all your “wants”. Needs such as food, shelter and clothing, electricity etc to wants such as takeaways and a new stereo. It is important to know how much you are spending in each area of your life so you can then allocate the appropriate money to cover that expense.
Caution – Be careful not to “rescue” your child if they spent all their money from their spending jar and want to buy something else. It can be a very valuable lesson – when the jar is empty, it is empty! Letting your child borrow from you until next pay day is only teaching them to spend more than they earn. This can have serious consequences in the future when they are old enough to take out loans.
Sylvia’s first book called “Parents – how to stop your kids from going broke” can be bought by contacting Silbo Systems
