Dollars and Sense

Good manners tell us that we shouldn’t talk about money because it isn’t polite. At the same time, we are bombarded with constant conflicting messages. One second ‘money can’t buy happiness’ is on a billboard and the next says ‘buy this product and you’ll be happy’. Commercials encouraging us to give generously interrupt episodes of reality TV idolizing excess and greed. This leaves many of us stressed and confused. Money has a powerful impact on our lives. It’s crucial we learn how to manage it well, and the experts agree the earlier we start, the better.

Talking about money can be hard but teaching the next generation good money management simply starts with a conversation. Nathan Dungan, founder and president of Share Save Spend and author of Prodigal Sons & Material Girls, urges parents to never underestimate the impact a discussion may have on a young person’s monetary future. Dungan says, “It is critical to see money as interaction – stories, values, morals, relationships – in order to help our children develop thoughtful choices for ‘doing money’ in our culture.”

Share Save Spend

The beautiful thing is kids are eager and excited to learn new things, including how to manage money well. The Share Save Spend model has been helping families develop financial literacy for several decades. It is itself the essence of an ancient system of financial management. The idea is simple. Our money, regardless of how much we have, can be divided into three categories for use: saving for the future, spending in the moment, and sharing with others.

Establish Priorities and Values

Wise money decisions require that our spending be aligned with our values. Therefore, we must start by understanding how we feel and think about money. Using Dungan’s ‘Financial Sanity’ technique can help reveal these sometimes-hidden values.

You might want to hold a family meeting where each person writes down one savings goal, one spending goal, and one sharing goal for the year. Then, assign each category a percentage weighting (older kids) or a simple ranking (younger kids).

How much of a priority is giving? Perhaps saving was most important? Often, faith can have a significant influence on these values. This gives you a springboard to talk about the values that shape how we use our money. Once priorities have been set, each person can write down one savings goal, one spending goal, and one sharing goal for the year. Now commit to helping each other try to achieve them.

Money-Wise: Practice the Three-Jar System

Now comes the fun part – put the priorities into practice. All money that comes in is divided according to our priorities and placed in either savings, spending, or sharing.

Share: Money for sharing helps to grow generosity, compassion, and an understanding of their role in the community. In Judeo-Christian tradition, this jar often includes an additional 10% for tithing.
Save: Money deposited in this category is to be saved. This helps develop delayed gratification, patience, and self-control, all valuable lessons for wise financial management.
Spend: This is the category for money to be used. This helps teach budgeting, making purchasing choices, and sometimes dealing with the consequences of spending decisions.

Seeing physical currency deposited in the jars can be impactful for young kids, while older ones may thrive with a digital system of accounts. The internet is brimming with ideas for three-compartment money banks that can be bought or made at home. There are even several smartphone apps available. Whichever way you choose to implement it, the allocation system works for the smallest incomes to the largest. In fact, parents starting out on this track themselves can work on it at the same time as their kids, just on a different scale.

Practice the 3 Jar System of money management with your kids. Share, save and spend!

When it comes to the lessons we want to pass on to our kids, money management is one that they will use throughout their lives. However, we need to practice what we preach. Talk about money management openly, share your values, model sound financial decisions, and give kids the opportunity to practice giving, sharing, and spending. In this way, we can raise a whole generation of kids who are thoughtful, compassionate, and wise with their money.