I always liked the idea of KISS (You know, Keep It Simple, Stupid.), but I never liked what the last “S” stood for. Referring to yourself or anyone else as stupid never felt like it was in the ethos of the general idea: Stop complicating things, and move forward on whatever you’re doing by taking the simplest path. Don’t knock yourself down; build yourself up.
Anyway, it got me thinking about my passionate belief in the importance of allowance, doing it right and how I might be able to provide the most KISS-friendly solution to parents. So here it goes: a way to get your child started learning how to handle money and make smart money choices in three easy steps and just five minutes!
1. Set up a THREE-JAR SYSTEM: Share, Save, Spend Smart. That’s it. Find some jars, write down these words and paste them on those jars. Simple!
Take five short minutes to set up an allowance system with Share, Save and Spend Smart jars.
2. Start an ALLOWANCE. Provide your child with $5, and have her put $3 in Spend Smart, $1 in Save and $1 in Share. Simply explain that the Spend Smart jar is for immediate expenses. Mechanical pencils are a favorite right now, for example. Save is the jar for longer-term items. Want a scooter? Set a goal (See below.), and start saving. Want to get it faster? Put your Spend Smart money into Save. Once they’ve accumulated some money in their Share jar, have him bring it to your religious institution, or have her bring it into school. (Schools usually have some type of cash drive going.)
3. Have him SET A GOAL. This is HUGE. Find a goal in the $15 to $30 range, and have her start saving. Keep the goal small so it’s something he can achieve in 2 to 3 months. Maybe even split the cost with her to help out.
So there you have it: the KISS method for starting your kids on the path to financial literacy. This is all about building habits (your providing allowance and guidance and your child’s making choices every week). Once you get started, you’ll likely want more detail. Check out my video on Effective Allowance from my last post for clarity on how and why to do more.