How to teach your kids about spending and saving money, credit, retirement and taxes

   I am currently the mother of 2 absolutely adorable children.  I have a responsibility to keep them alive long enough to become adults, taxpaying adults that is – my husband is a Certified Public Accountant.

   A little while back, while I was busy doing work around the house, I had a realization: “What if the kids do not learn responsibility about money?  How can I teach them to be viable self sufficient tax abiding citizens?”  Seriously, look at all the ins and outs of earning money, saving it, spending it, and most importantly paying taxes – that is a lot to teach a kid. 

   So, there I was a few days later after having this realization, taking a break from my day in front of the TV and the answer to how I was going to teach my kids about money was right there on Oprah. She was doing a show that was demonstrating how to do this by using three jars.  I was so intrigued by this system that I knew I wanted to start something like it. I thought about it a little while and I came up with my own version.

   The way I do this is…I have 4 mason jars for each child and each one of them is marked.  The first jar is for the child and is labeled with their name and the word “Spend” next to it.  This is the money they can spend on anything they want.  The second one is for charity, and is labeled “Charity”.  Ten percent (10%) goes to the charity of their choice. (You can leave this one out if you really do not want to teach your children about giving this way, but I find that it helps with their compassion and makes them feel like they are doing a good deed for the community.)  The third one is for savings, and labeled as such; I have them put 25% in this jar.  (I know what you are thinking “25% that is a lot,” well it is only 25 cents if they earn a dollar, and it teaches them to save money before they even bat an eye. This helps them save for big things they want that I absolutely refuse to buy.)  And, if they save over $50.00 we put it in to their college funds.

   The last jar has “Taxes” on it and in goes the remaining 15%. A lot of people that I have told about my solution for teaching my kids about their money think this is cruel and unusual punishment because I make them take 15% out of every dollar they earn for doing chores or from their allowance, for taxes. Yeah, my kids sometime scream about it too, from time to time, but hey I figure this is better than them learning the hard way about the consequences of not paying their taxes. This also gives them a reality check on how much they can spend.