The jar method

The ‘jar’ method has become popular in recent times and is an effective way to teach kids about the different options for their money.

With this approach you use old-fashioned cash as payment for chores. As Sorted.org.nz suggests, you need to start talking to your kids about four key words – Spend, Save and Share – with a 'G' for 'Growing' too.

Instead of using a piggybank, get four clear jars for them to allocate their pocket money into. The ‘Spending’ jar is for money to spend themselves, while the ‘Save’ is to go away for a big item. The 'Sharing' jar meanwhile, is for donations (they could use this to pay for things like Gumboot Day at school, or for a charity of their choice).

The 'Growing' jar is a slightly more advanced concept and is intended for some sort of investment or entrepreneurial venture - something that will grow money. Perhaps they can use this to buy the ingredients for their bake sale stand for instance. When the kids are older, you could use it to discuss investment.

You can always replicate this model online in some form as the kids get older and grasp the basics. You can read more about the jar idea here.

Make the invisible visible

Things like prepaid public transport cards are a great way to help make electronic money more tangible too. Show the kids the balance on your card before and after you take a trip, so they can see the balance go down. Consider giving them a Prezzie Gift Card with money on it for a birthday and help them see how the money disappears just like physical cash when they spend it.

When you’re at the supermarket, explain why you’re leaving some items behind – because there isn’t enough money on the card to pay for it, because you consider it to be too expensive, or because you’d rather use that money for something more important, like a savings goal.

Keep talking

Kids absorb your money habits. When you buy something, show them how you shop around for the best deal – help them do the same with something they’ve saved up for.

Help them set goals

Talk to the kids about your financial goals and encourage them to set their own and discuss what they need to do to get there. Celebrate with them when they achieve these goals.

Show them the power of earning money and encourage their own entrepreneurship. What else could they do to earn money themselves? Could they get a small job outside of the family? Barefoot Kids by Scott Pape is a great book for showing them the value of, and ideas around, entrepreneurship for kids. 

Let them make mistakes

In the early days, the kids may well take their entire spend jar to the dairy and blow it on lollies. Let them make their own mistakes on a small scale. Better to do it now than to blow thousands of dollars later as a financially unsavvy young adult.

Resources

There are many great websites with ideas to help you teach your kids about money, whatever their age. Some good ones to start with include:

• Sorted.org.nz offers free, impartial and independent financial information and resources for Kiwis.
• Getwise.co.nz (ASB) offers parental resources for teaching kids about money, broken down by age.
• MoneyHub.co.nz – put together a guide for teaching kids about money

Written by: Sonia Speedy

Sonia Speedy has been a journalist for over 20 years, working in newspapers, magazines and radio. She also runs an online platform for parents at familytimes.co.nz. She lives on the Kāpiti Coast with her young family and loves writing stories that help make people's lives easier.