The Seedling Blog

A New Year’s Resolution for the Kids: The Three-Jar Approach to Allowances

The “Three Jar” Approach to Allowances was originally published on and has been reprinted with permission


As 2016 gets under way, many of us have set goals for the New Year— to get more exercise, to spend more time with friends, to travel to somewhere exotic… While we often set intentions for ourselves and perhaps a joint resolution for ourselves and our partners, we often overlook the opportunity to include our children in the New Year’s resolution process.

As a parent, it’s incredibly important to me that my child learns about money from an early age. I want him to understand its value, the hard work it takes to earn money, and the best practices on what to do with money once he’s gotten it—how to save, when to give, and how to make deliberate decisions about spending. So, I’ve made a resolution to begin what is referred to as the “three jar approach”.

Our friends at Twigtale have written a comprehensive article on teaching children fiscal responsibility; a simple method for kids to divide their earned allowance to save, spend, and give back to the community. We’re happy to share that article here with you:

“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.

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:

Create Three Jars 

Label one “Give,” one “Save,” and one “Spend.”

Determine Allowance Amount

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 1.66. In order to avoid what would surely be an exhausting explanation about infinity to Savannah, I rounded up to $1.75.

Distribute Weekly 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.

As the “Save” jar grows full, open a bank account for your child.

Discuss Places to Donate

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).

Let Them Spend

Let them use the “Spend” money as they see 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.”

Offer Additional Ways to Earn

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.



How do you talk to your kids about money? What kinds of tactics to you use at home? Share your tips with us in the comments below!


11 tips for entertaining in a small space

How to throw the ultimate frozen fever party

14 next-level nacho recipes

6 things you should stop paying for if you give your kids an allowance


Leave a comment