The "Three Jar" Approach to Allowances

by Carrie Southworth, co-founder 

The "Three Jar" Approach to Allowances was originally published on Babble.com and has been reprinted with permission. 


“Mommy, how do I make money? You know, to buy stuff.”

Once again, stumped by my 5-year-old daughter, Savannah.

Up until this point, I tried to run our household in a very specific way — my husband compares it to a hippy commune. “We’re all citizens of the house,” I would tell my children. We all had jobs as citizens; we all had to pitch in. You see, I wanted to teach my children to contribute for the sake of contributing to a greater good, without resorting to incentives or threats. I wanted them to grow up with a strong work ethic, and I wanted them to grow up without being spoiled (a fear I know I share with many parents).

This plan had worked well, until now — when my daughter finally realized that there is this thing, in fact, called money. She didn’t have it, and she wanted it. To buy things.

Damn. Foiled by capitalism.

I realized that my parenting, as it pertained to money, needed to evolve. I wanted to incorporate the reality of capitalism and earning a wage with the ideals of contributing to a greater good. Could I avoid the traditional money-for-chores technique? (A technique my own parents had used, by the way.) Where should I start and how?

Armed with those questions, I called one of my favorite child development experts. Allison LaTona has been one of Twigtale’s cornerstone experts since the founding of the company — and I had her on speed dial. She was definitely the right person to ask for advice.

Allison had a plan for me, and I loved it immediately. A fun, hands-on approach, it taught all the lessons I aspired to teach Savannah about earning, saving, and giving. I call it “Give, Save, Spend.” This is it in a nutshell:

  1. Create three jars. Label one “Give,” one “Save,” and one “Spend.”
  2. Divide your child’s age by three to come up with the allowance for each jar. My daughter is 5, which divided by three equals 1.666666. In order to avoid what would surely be an exhausting explanation about infinity to Savannah, I rounded up to $1.75.
  3. Every week, give your child this allowance. I give Savannah $1.75 to put into each jar ($5.25 in total). I don’t give her a choice — she must evenly distribute the money between the three jars.
  4. As the “Save” jar grows full, open a bank account for your child.
  5. As the “Give” jar grows full, go through options for where they can donate the money. Savannah and I talked about giving the money to animal shelters or finding a place that takes care of abused horses (she LOVES horses).
  6. Let them use the “Spend” money as they sees fit. The other day, Savannah and I were in the line at the grocery store. She wanted M&Ms. “Sure,” I said. “We can take the money out of your Spend jar.” She only hesitated a minute. “Never mind. I am saving my spend money for a giant, stuffed unicorn.”
  7. If they want to earn extra money, come up with jobs outside the realm of normal household chores. Savannah wanted to earn extra money, so I paid her $2 to clean all the cobwebs from the swing set in the backyard. I also told her she could wash my car (Warning: you will need to take your car to a professional car wash after a 5-year-old “washes” it.) Savannah put this extra earned money into the “Spend” jar. *

What I love about this plan is that it teaches a slew of lessons to Savannah. Fiscal responsibility (save and spend), philanthropy and compassion (give), plain old math, patience, and delayed gratification. I also quickly realized that this plan teaches Savannah to prioritize — a level of thinking needed in a world that has limited resources. A world where we need to support both ourselves and our community.

I can’t shelter my children from money. In fact, it is my job not to. We live in a country where consumerism is ever-present and credit card debt is an epidemic (in 2015, the average American household has over $16,000 in credit card debt). Also, girls are often not given the same lessons and confidence in finances as boys are. So yes, it is my job to teach these money lessons to my daughter. She needs to know about money and all the decisions, limitations, disappointments, gifts, and freedoms that come with it. With the “Give, Save, Spend” plan, I continue to teach Savannah about hard work while raising her to understand the value of a dollar and what it means to give to those who need help.

Awesome.

And meanwhile, back at home, the plan is “awesome“ in Savannah’s mind, too. I mean, she is halfway to saving for that gigantic, stuffed unicorn.

I can’t wait.

*This plan was influenced by two fabulous books that I highly recommend when trying to figure out how to raise fiscally responsible kids: Raising Financially Fit Kids, by Joline Godfrey and The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money, by Ron Lieber.

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