Tips for teaching kids about money management early in life.
Teaching kids about money management early in life is a valuable skill that can set them up for long-term financial success. One effective method to introduce financial literacy to children is the 6 Jar Technique. This method is simple, visual, and hands-on, making it perfect for young minds to grasp the concept of managing money wisely.
What is the 6 Jar Technique?
The 6 Jar Technique by T Harv Eker involves dividing money into six categories, each represented by a jar. This approach teaches kids that money should be allocated for different purposes, encouraging them to think about their spending and saving habits. The jars are:
Necessities (55%): Money for essentials like food, clothing, and school supplies.
Savings (10%): Funds set aside for future needs or emergencies.
Education (10%): Money allocated for learning resources, books, or courses.
Play (10%): Fun money for hobbies, toys, or activities they enjoy.
Giving (5%): Funds for charity or helping others.
Investing (10%): Money saved for future investments or long-term goals.
How to Implement the 6 Jar Technique
Here’s a step-by-step guide to introducing this technique to your kids:
Start with Physical Jars: Begin by getting six jars or containers and labeling them with the categories. Physical jars are tangible and help younger kids understand the concept better. You can even let your child decorate the jars to make it a fun project.
Explain the Purpose of Each Jar: Take time to explain what each jar represents and why it’s important. Use simple language and relatable examples. For instance, explain that the Necessities jar is for things they need, like school supplies, while the Play jar is for things they want, like a new toy.
Use Real Money: Whenever your child receives money—whether it’s from an allowance, a birthday gift, or earned through chores—help them divide it into the jars. This practice reinforces the idea that money has different purposes.
Set Goals Together: Encourage your child to set small, achievable goals for each jar. For example, they might save up for a book in the Education jar or donate to a cause in the Giving jar. Setting goals gives the activity a purpose and teaches delayed gratification.
Track Progress: As your child fills each jar, track the progress together. This can be done using a simple chart or by regularly counting the money. Celebrate milestones to keep them motivated.
Discuss the Concept of Interest and Growth: For older kids, introduce the concept of interest for the Savings and Investing jars. Explain how money can grow over time if it’s saved or invested wisely. You might consider opening a savings account for them or exploring child-friendly investment apps.
Practical Tips for Success
Consistency is Key: Make the 6 Jar Technique a regular part of your child’s routine. Whether it’s weekly or monthly, consistency helps reinforce the lessons.
Lead by Example: Children learn by observing. Show them how you manage your own finances using similar principles. Share your own financial goals and how you’re working towards them.
Adapt as They Grow: As your child grows, their financial understanding will evolve. Adjust the technique to introduce more complex concepts like budgeting, investing, and financial planning.
Make It Fun: Turn financial lessons into games. For example, challenge your child to find ways to save more money or come up with creative ways to earn extra cash for their jars.
Encourage Discussions: Make money a comfortable topic in your household. Encourage your child to ask questions and share their thoughts about money. This openness fosters a healthy attitude toward finances.
Involve Them in Family Financial Decisions: Involve your child in small family financial decisions, like planning a budget for a family outing or grocery shopping. This real-life application helps them see the value of money management.
The 6 Jar Technique is a powerful tool to teach kids about wealth management. By breaking down the concept into manageable, hands-on steps, children can develop a strong foundation in financial literacy. Remember, the goal is not just to teach them about money but to instill values like responsibility, generosity, and foresight. With time and practice, these lessons will stick, setting your child on the path to financial independence and success.
Be well,
Paula
Dr Paula Robertson is a busy mom and a paediatrician with over twenty years' experience working with young people and their families. She is also a certified children's mindfulness teacher and Positive Discipline Parenting
coach. You can find out more at www.paulathedoctormom.com.
Our AI wellness assistant has contributed to the writing of this article.
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