All three of my kids have recently celebrated birthdays and received a bunch of little gifts. In the mix of these gifts were some gift cards and a little bit of cash. I decided to take advantage of these newfound gifts to provide a money management lesson to our 8 year old and 10 year old daughters. My 4 year old is still too busy with Paw Patrol to care and he thinks that when mom and dad need cash they withdraw it from the Dollar Store. It's far from the first time we have discussed money with the kids. My wife and I have spent a fair bit of time teaching the importance of saving money and giving charity. Our morning commute to school has been a great time to discuss topics like this, and we have covered everything from car insurance to bank accounts to basic investing. I'm always fascinated by some of their questions - they are full of insight and naiveté all at the same time. All in all, it makes for wonderful conversation and a solid opportunity for us to educate our children. 

I recently came across a book by Ron Lieber, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money. I confess that I have yet to read the book, but I was extremely intrigued by the cover image. Three simple jars - one for saving, one for spending, and one for giving. We purchased a bunch of jars at the Dollar Store, labeled them and gave a set to each of the girls. They were instructed to take their $40 in birthday money and divide it among the three jars. Something needs to go in each jar, they can decide the split and there is no right or wrong way to divide it. Ella, my 10 year old latched on to the concept immediately and started the exercise. She asked me if I had change and that's where we hit a roadblock. This digitally oriented dad rarely carries cash, so I was forced to visit my local bank. Ella divided her $40 across each of the jars. She placed $10 in give, $15 in save and $15 in spend. She made sure to point out to me that the most money was placed in the save jar (what a suck up!). When she completed the exercise she hit me with a big question. "Dad, can we start getting an allowance?"  I suggested we focus on the task at hand and discuss allowance at some other time. I was quite proud of her though for using the situation to her advantage. She also asked me what happens when the save and give jars are full and I explained to her that the "save" funds will be deposited in her bank account and she can choose where to donate the "give" money.

Lauren, my 8 year old, was extremely excited to do the exercise. She did however feel some competitive pressure from her sister who swiftly and confidently completed the exercise. She had a question before dividing her money. "Dad, can we please go to the bank so that I can take another $40 out of my bank account to put in the jars?" At that moment I realized that some additional clarification was required. My daughters have no interest or use for the bank at this stage of their life. As far as they are concerned the bank swallowed up their money the last time they went there. To be fair, they had a horrible experience when we took them to open their first bank account.  Lauren's request presented an opportunity to more tangibly explain the role and purpose of a savings account. As much as I would have liked to explain on the spot, the competitive pressure was too much for Lauren too handle. Once she calmed down she listened to my explanation and immediately understood. The money from a full jar will go to her savings account. Lauren placed $20 in give, $20 in save and $10 in spend.  Lauren also had a small gift card from Toys R Us that she tried to force into her spend jar. I thought that was just brilliant as she clearly understood the purposes of each of the jars. I offered her cash in exchange for her $20 gift card and she took the cash and wanted to split it across the three jars. I was so proud of her for not only understanding the exercise but also for wanting to save and give more. I commended her on the approach but also insisted that the $20 go in her spend jar - it's meant for her to buy something with. For their efforts, I rewarded each of the girls with a bonus $5 to place in their spend jars.

The kids are proudly displaying their jars on their dressers and are looking forward to the next opportunity to add to them. I've also noticed that they are far more cautious as to what they pull out of the spend jar - it has become a very tangible and finite resource and they are forced to think prior to dipping in.

I learned a few things from this exercise:

  • Kids can be extremely generous. I was absolutely blown away by how much money they chose to give to charity. It's a huge lesson for kids and a value they will carry into adulthood.
  • Gamification can have positive and negative consequences. I did not intend for the girls to view this as a competitive exercise but I should have known better. Individuality needs to be respected and if I were doing this again I would take the time to do this separately with each child. I guess I can try again when my 4 year old little guy is a bit older. There are positive aspects however to the gamification. A visual of a jar getting fuller is a great motivator. Positively reinforcing their behavior with a monetary reward will incent them to keep at it. Dad provided a better interest rate than the bank but the concept is still the same. 
  • As digitally oriented as kids are, cash is a far more tangible way to learn about money. Bank branches and mobile banking apps are abstract concepts for kids. Cash is real, you can touch it and you can see what happens when you add to it or take away from it.
  • Visualizations are critical when it comes to money management. This applies to individuals of all ages. For kids the jars are a great tool. For adults it may be a mobile alert or a chart full of rich data.

Round 1 of jar-based money management was a huge success. I'm curious to see what happens as the kids add to and dip into the jars and I will report back with material findings. 




About Jacob Jegher

Jacob is President at Javelin Strategy & Research and a member of Escalent’s senior leadership team. He is responsible for Javelin’s overall strategy, vision, growth and product development efforts. An experienced fintech executive and thought leader, Jacob advises clients on emerging technologies and business strategies related to digital banking, payments and fraud & security.

Most recently, Jacob was Vice President of Global Solution Marketing and Head of Analyst Relations at FIS, where he was responsible for marketing strategy efforts across all business units and solutions. Jacob also brings extensive expertise in the banking research and consulting field, having spent over 10 years as a Research Director at Celent.

Jacob has been widely quoted in the press, including in The New York Times, The Wall Street Journal, American Banker, Bloomberg, The Globe and Mail, and Financial Post. He is a sought-after speaker and has presented at numerous industry and corporate conferences, including Money20/20, Finovate, Digital Banking, NACHA Payments, and the Association for Financial Professionals.

Jacob holds a Bachelor of Commerce degree in Management Information Systems and Finance from McGill University.

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