Money Matters: School Allowance and Money Management
A few years ago, I came across the three jars concept in teaching kids about finances and money management.
The three jars concept teaches kids to divide their money in three jars labeled for giving, for saving, and for spending.
In most videos I’ve watched on YouTube, the money that goes to the giving jar is meant to teach the child to give to charity institutions and for those in need; the jar for savings is meant to teach the child to learn to invest; and the jar for spending is for his own expenses.
I’ve taken note of the three jars strategy and have started teaching it to our eldest son since two years ago. But since our kids are home-schooled and we’re usually just around when they join activities, it has been unnecessary to give them school allowance until this school year.
This year, we enrolled them at a nearby blended homeschool center where they get to join Music, Arts, P.E., Values and elective classes once a week.
Unlike in their previous MAPEH center, they now have to be in school for 8 hours, so I thought it was a good opportunity to start giving our eldest son school allowance, after all he’s eleven and needs to learn how to manage his own money.
The failed strategy
We tried another strategy years ago, the one where we give Pablo money for completing chores around the house, but it didn’t work for us.
For one thing, I think that there’s value in teaching kids to do house chores without monetary rewards. Not only are these practical life skills, we also teach them that being part of a family means taking your place and doing your part.
And it teaches them stewardship. They learn to take care of the things that God has blessed them with- like our home, their toys, their things.
Secondly, we kept running out of money to pay him, haha! I thought it was unfair to pay a child in coins for “working,” and paying Pablo fifty pesos a week (and more for bigger chores) went beyond our budget that time. We had to rethink our strategy!
Our modified version
This school year, we started giving Pablo a hundred pesos for every MAPEH day.
Instead of jars, Pablo uses labeled envelopes to divide his allowance. And instead of labeling them for giving, for spending and for saving, we taught him to label them tithes and offering, savings and spending.
I’ve mentioned before that we practice giving our tithes and offerings to remind ourselves that it is God who gives us the ability to produce wealth. We want to pass this on to our children.
Then of course the savings envelope is for teaching Pablo to make financial investments for his future, which I also think trains him against instant gratification.
We’re opening a mutual fund for him at the end of the school year and that’s where his savings money will go. He goes with us everytime we make deposits in our own MF’s and we’ve been talking to him about why we’re doing it.
I’ve also heard that the best way to make kids excited about stocks and investment is to help them put their money in a company they already care about. For example, if they like Jollibee, then help them invest in that company.
So maybe Pablo will be interested in investing in an animation company he knows very well. We’ll see.
The principle of sowing
As for the rest of the money, he’s free to use it however he pleases. The kids bring lunch boxes, snacks and a bottle of water each anyway, so the money is really a bonus.
If you’re wondering why we took out the “giving” label, it’s because we are teaching our children to give from what they have.
To choose compassion, generosity and kindness over their own wants.
And I’m glad to see Pablo practicing this. Yes, he would buy himself something once in a while, but I’ve also witnessed him buying something for a hungry friend or brother. It’s a good start.
One day, we will teach Pablo to include “giving” when he budgets his money, but for now, we want him to practice the principle of sowing generously.
Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. 2 Corinthians 9: 6-7.
The key is to let your kids spend some of their money, because it’s when they experience its benefits that they start understanding its value. I think it’s easier to teach your kids how to save and invest if they understand the value of money.
Now the question is, will they be willing to let this “value” go to help another human being, for a worthwhile advocacy, or to stand on their convictions?
I believe that they have better chances at this if we train them young.
Of course we want our kids to lead financially abundant lives when they’re adults, but we also want them to live full lives – knowing how to love people and knowing how to honor God.
Does the strategy work?
So far, this strategy works for us. Every time we give Pablo his allowance, he automatically divides his money and puts them in their respective envelopes. He doesn’t dare spend until he has done this.
So I think we will use this strategy for our other two kids when they’re old enough to remember to wait for their change before walking away from the counter with their ice cream , haha!
For now, we talk and teach them the principles which they will eventually have the opportunity to apply in a few years time.