Three Jars Help Kids Save
Posted by Gail | Filed under Kids & Money
I’m a BIG proponent of the jar system. When I wrote The Money Tree Myth a million years ago (it’s out of print but now you can buy Money-Smart Kids) I introduce the jar system as a way to help children visualize how much money they had and how their spending was depleting their resources. When we started shooting Til Debt Do Us Part, we introduced the jars as a visual reference on TV. Little did I know that The Magic Jars would become one of the most popular financial lessons for adults. Seems we could all use some schoolin’ in the idea that money is an exhaustible resource.
Now from the U.S. comes ThreeJars.com. Virtual jars are substituted for the physical jars and kids learn to save with a click. Here’s how it works:
When you sign up for the service, you decide how much you will give your child as an IOU Allowance… so no money actually changes hands. You divvy up the money between three jars: saving, spending and sharing. If kids want to spend some of the money they send you an online request, which you can approve or deny with a click. If you approve, you hand over the cash and the IOU balance is reduced.
ThreeJars.com charges a fee of $30 a year – a small cost for teaching kids to save. And the site encourages parents to pay interest on their children’s savings balances. To quote the site, “While the interest is not a lot to you, it is to them. Your child sees?interest accumulate daily and the tradeoff between saving and spending is made apparent.”
In addition to their allowance, the site gives parents the facility to encourage kids to earn extra IOU bucks by requesting paid-for work around the house. If you like your kid’s pitch, you approve the project, set the price and when the job’s done, you add extra IOU bucks to the virtual jars.
It’s a nifty idea, and certainly one that will appeal to parents reluctant to give their children responsibility for making their own spending decisions. But it has some drawbacks.
Since kids are using virtual money for the process, they’re never actually dealing with the paper and coin that make money management very real for children. Kids are a concrete bunch, especially in the early years.
Another potential glitch: if you always assume responsibility for approving or denying children’s requests to spend, when do they learn to make those decisions for themselves?
I like the site. It’s clean, easy to use and clearly explains the process they’re advocating. And if your child is tech savvy – and who amongst our progeny isn’t these days – this may have quite a bit of appeal. I would encourage parents to monitor their children so they don’t develop the sense that this is “play money,” which is exactly what plastic has done for so many adults who “play money” themselves into debt.
October 29, 2012 at 5:26 am
You lost me at the $30 annual fee
October 29, 2012 at 5:40 am
Lost me at $30 fee too. If interest is an important lesson, I’ll offer a 2% rate on their savings’ jar. That’ll develop their math skills! I’ll also offer a 20% rate on any “credit” they use. I’ll make a nifty card from the bank of mom and everything.
October 29, 2012 at 5:58 am
I love this idea, but don’t see myself paying $30 to teach my kids about money. They should offer the service for free and place relevant ads on their site to make money.
October 29, 2012 at 6:58 am
You’ve taught us too well, Gail! We hear the word ‘fee’ now and then head for the hills!!
October 29, 2012 at 7:54 am
I don’t like it much either, for all the same reasons! I think parents would be setting a better example using actual money, as we have all learned it is harder to spend it if we actually have to hand it over! I know my kids used to shake their jars, they liked to see and hear it! I have opened bank accounts so the kids see how much money online(no fee banking) they make for just leaving it be, they thought it was great that the bank was giving them coins just to collect money! Now at ages 13 and 16, they have saved more and have seen that they can also earn dollars for just collecting money! I am hoping the mistakes they make will be fewer and less costly than my own.
October 29, 2012 at 8:08 am
I’m the same as the posters above – as soon as you mentioned a $30 fee – I was out! I give my kids an allowance on our pay day (every two weeks), and they have three jars, spending, savings and charity (sharing). It is very hard sometimes for me to see, but they can spend the “spend” jar any way they want (even if it is on junky stuff). However, they have learned some lessons in doing so. Spend now, and then see something you REALLY want, and have no money to buy it. I will do “loans”, but it is written down and comes out of the next allowance. For my 8 and 11 year old girls, they “get it” now. So, I don’t need a program to do this for us – especially when $30 can stay in my pocket. Yes, Gail, you’ve taught us well!
October 29, 2012 at 8:08 am
It would take a little work to set this up yourself, but if your kids are old enough, you could use googledocs. Set up a little spreadsheet, share it with your child. Googledocs is free – and you can teach your child how to use a spreadsheet at the same time to calculate interest.
Go to the google homepage and click on MORE on the header menu. You’ll probably need to click on EVEN MORE at the next pull-down menu. You want the DOCS option, and then you can create a spreadsheet and share it with your child via email There will be a learning curve for you if you don’t use google accounts, you may have to set up an account for yourself and your child, and even learn the basics of spreadsheet use yourself. But really, it’s sort of fun, you can do it together with your child. My husband and I share financial info fairly regularly this way and it’s dead easy once you get going.
I can’t believe they are charging $30.00 per year for this service – or more to the point, that anyone would spend $30 PER YEAR for this, especially readers of this site.
October 29, 2012 at 10:23 am
I didn’t like the fact that the kids don’t actually get paid their allowance each week. Nor the fact that they had to get approval to spend their money. That’s exactly the wrong message.
My kids have their own bank accounts that pay them interest. It is real. Their money is real. Their care/share jar and savings jars are real. They don’t ask me for money to buy things for the school build a shoebox program. They bring their care/share money and buy things for it themselves. They decide, it isn’t another chore for me. This also doesn’t make the little one feel like she is “wasting” her own money, it is already in a separate jar for that purpose.
I was also a little distressed about all the messages on the computer. Do the kids live in a different province? Part of learning about money is the discussion.
October 29, 2012 at 10:47 am
$30/year is too much for us. I’ll use excel spreadsheets instead when we need an electronic tool. My kids have traditional piggy banks and a nifty “coin catcher” that is basically a fabric bag on the end of a funny face with open mouth to receive the coins. We got them on a tour of the mint in Winnipeg. They feel the piggy banks get heavier and see the coin catcher swell with their coins. They get really excited pulling the coins out to count every now and then.
The teaching part for us is when I set an amount I am willing to spend on school book sales, say $10 each. They decide which books they want and we total the cost. If its more than $10, they have to dig the money out of their coin catchers. If they have enough, they can get the extra. Otherwise they have to choose what to leave out. Sometimes its pretty gutwrenching for them.
This morning, our daughter started to dig through her coin catcher to get $10 out to add to the $10 I said I would give to their school Unicef fundraiser. She wanted to do $20 total. So the lesson about helping others is also learned with the hands on money.
I think the hands on is better for kids for the same reason moving to cash only works for adults. We are somehow unattached to our money if we use plastic.
October 29, 2012 at 11:15 am
I am rather disappointed Gayle, I’ve been following you for years and years and years. Takes me a while to learn my lesson, but I’m stubborn so I watch your shows often for great tips and reminders that you do NOT have to spend money to have fun, to teach a valuable lesson or to have a rich life.
But first it was some one line brain game….I was all excited and in the midst of signing up (at your urging) only to realize that this is a PAY service. WTF? I can go play Suduko or Crossword puzzles or board games with the family (instead of running out to a movie or going shopping – ahem) to keep my brain sharp AND have a great family night.
And now this?
YOU have said it before countless times that WE NEED TO SEE THE PHYSICAL cash, that we get hooked into this mysterious credit and debit fantasy and don’t really SEE the money coming in and out of our accounts. So what is this then? A virtual jar system? WTF? How is that going to teach my kid anything constructive? Why not promote three online bank accounts through ING direct or something and sitting down with your kid to move money from one location to another. Just as effective, and NO SERVICE fees.
I’m really shocked and surprised that you’ve been promoting these things because for YEARS you have pushed and lectured the exact opposite, that paying unnecessary fees is DUMB.
I can only assume that you are being paid well to promote them.
October 29, 2012 at 11:40 am
Jennifer – just a heads up that the Lumosity site is only a pay site if you want full access to all the games and all the reports – I use the basic service daily for free.
October 29, 2012 at 11:57 am
Well, when it started asking for payment information, I was out of there, because what comes next is usually constant nagging (which I am getting from them) about their services an asking me to subscribe.
Even still, my point is, is that I was shocked she was promoting it when there are SO many other free online games that do the same sort of thing.
October 29, 2012 at 12:03 pm
http://www.moneytrail.net/
I think this is FREE.
A friend of mine use this.
Thank
October 29, 2012 at 12:04 pm
Jennifer, you are being pretty harsh. Gail is recommending this tool as part of an overall plan. NOT EVERYTHING IS FREE. Speaking of free, Gail’s countless hours in blogging for all of us could easily be charged for. Just because something costs money doesn’t mean it isn’t ‘worth’ pursuing.
People who read this site tend to be quite frugal and probably don’t need the help.
When she suggests her Jerk Chicken recipe, no one freaks out because she is recommending that people BUY chicken.
This is no different. Relax.
Finally, questioning Gail’s integrity makes me seriously angry. Nowhere on the Canadian financial scene is there anyone with more of it.
Keep up the good work, Gail.
October 29, 2012 at 12:28 pm
$30 fee for online service is not worth it to me. Save your $30 bucks. I agree that children do better when money is a concrete object that they can see and touch. You will spend less buying your kids 3 piggy banks (if you want to be fancy) from the dollar store.
We have a small, medium and large piggy bank for our child. All on her own doing, she assigned 70% for savings (large piggy bank), 20% for spending (medium piggy bank) and 10% for charity (small piggy bank). Once a year we double the money she has in her savings piggy bank. At 100% Return on Investment, this is the reason she is motivated to save 70% of her weekly allowance. She can use that interest on whatever she wants… which usually translates into going back into savings for the majority of the $’s. She keep about $50 of the “doubles money” to put together with her spending piggy bank money to use for toys she would like. We learned this “Bank of Mom and Dad” approach for an older and wiser couple we know who are millionaires.
We have been using this approach since our daughter was 5 years old and she is 10 now. We give her $10 a week to match her age. This system has been working out great. She watches all of Gail’s shows with me which has been great for everyone in our family to learn how to be smart with our money. She know that if she is not wise with her money that “Auntie Gail may just reach through the TV and smack you one for being dumb.” Thanks for being in our lives Gail. You are an inspiration and have becoming our adopted Auntie Gail. Have a great day everyone!
October 29, 2012 at 12:44 pm
This comment is for Jennifer, when I read your comment I felt sad for Gail. She offers all of her advice for free on her website and she answers fans questions. I do think in this day and age where most kids use the computer for everything (my 5 year old can text her dad on my phone and she plays on the computer and enjoys it) that she was suggesting an option for parents who have kids who use their computer for alot of their day to day activities. My daughter and I are visual learners so this wouldn’t work for us but not everyone are visual learners.
Keep up the good work Gail.
October 29, 2012 at 3:11 pm
Well said Karen M!!
October 29, 2012 at 3:47 pm
OK, so I just checked out the site, and it says it’s FREE for LIFE if you sign up by Dec. 31st. I watched their video which basically showed kids earning money for chores, some of which I personally should be done just as being part of a family.
Seeing as how you can do this for free with a couple of empty jars and a piece of paper outlining chores with dollar amounts, I wouldn’t pay $30 a year (what cost will it be in year 5??). It may work well for some families esp. within the age 5-12 range of children, but I still like the idea of teaching children yourself.
My child that still receives allowance is 16 ($20/wk) and I don’t feel she would be interested in this at all.
Anyway, that’s my 2 cents
October 29, 2012 at 5:08 pm
Let’s face it. Gail is preaching to the converted on this website. We’re too good at saving to pay for a service that can be performed in a low-tech way.
I don’t think kids need the online program, but if it encourages them to learn more then it might be worth it.
October 29, 2012 at 5:34 pm
I did take a peak and the site does say Free for Life until December 31. I don’t know where the annual fee information is, but I signed up and I didn’t see it, not did anything ask me for financial information.
It’s actually quite a cute site and worth signing on to just to take a look. It’s cure, easy to navigate, and might actually be useful. Plus it’s free. For now. Thanks for the link, Gail. I really don’t know how you have kept up posting every day for so long about so many interesting things.
October 29, 2012 at 8:13 pm
This is such a terrible idea. I can see it now, parents owing their kids hundreds of dollars, and they’re too in debt to pay them. The kids will cry, and the parents will gain a new creditor – their own kids! Stick to cold hard cash, at least you’ll never let your kids down by not having the money to give to them!
October 29, 2012 at 9:13 pm
Thanks for the post Gail.
For some of those who posted on this blog…did you ever hear the saying…if you don’t have anything nice to say…
Let’s keep it friendly.
October 29, 2012 at 11:57 pm
This is a great idea, as long as it’s moderate amounts and it doesn’t get the parent in trouble financially
. I like that there is a sharing jar – it certainly teaches kids a good value. It’s too bad it’s a paid service.
October 30, 2012 at 12:52 am
Jennifer, I’m rather disappointed in you. Why would you assume I’m being compensated by the company? I think it’s a shame that you would feel so strongly about my suggestions (which is all they are, you have to do your own homework) that you’d respond with such negativity. Perhaps you don’t really belong in this community. We like to share ideas, knowing not all ideas work for all of us. We take from it what works for each of us.
Above all, I object to you questioning my integrity. Buh-bye, Jennifer, buh-bye
October 30, 2012 at 2:40 am
I’m reading these comments with great interest because I founded a similar site over 6 years ago. I’m really surprised at the overwhelming negativity toward the idea (and even Gail – really?). So I thought I’d lob in a few thoughts to provide some alternative perspectives to at least consider.
First, on the “should-be-free front”: to be viable, every business needs a revenue model. Talented people don’t work for free. So, let’s consider the alternatives to the paid subscription model that appears to be so reviled by many of the commenters:
(1) Ad-driven business model: have you ever checked out the math on how many page views you’d have to generate to make ends meet as a business here? It’s truly staggering. (I was VP of Engineering at one of the first ad serving companies on the Internet, so it’s familiar territory!) You’d end up designing a site that nags parents to constantly interact with it. You’d be forced to build capabilities outside the core mission of teaching kids good money habits just to get your numbers up. Here’s the rub: every parent I’ve ever met (our target audience) is insanely busy. They want a site that doesn’t keep nagging them to check back in all the time. Parents just want it to quietly run in the background and be there when they need it for a “financial teachable moment” with their kids. Perhaps more importantly, when the mission is to teach fiscal responsibility and delayed gratification, there’s just something out of kilter with a site that tries to constantly push ads to purchase random stuff.
(2) Affiliate business model: this means that the site places a storefront within their application and receives a small commission on any item bought through their site. So, for example, the site might let your child browse a catalog of products and when they’ve saved enough, they get their parent to purchase the item through the site. The site gets a small percentage of the sale. The problem is: the site’s revenue is dependent on convincing members (i.e., kids!) to buy more stuff. Again, that’s inherently out of sync with teaching kids to moderate their purchasing impulses and delay gratification. It feels wrong. Inevitably, the quest for revenue will ultimately subvert the mission
(3) Sponsored business model: in this model, a sponsor like a credit union or a bank picks up the tab so that it’s members can enjoy the service for free as a side benefit of belonging to the sponsoring institution. This is a reasonable business model because it is not out of sync with the mission. Revenue ends up being a function of how satisfied the members are with the service. It’s an option we offer through our partners, but you have to be a client/member customer of theirs.
As mentioned in several comments, another alternative is Do-It-Yourself: just keep track of things in a spreadsheet or even pencil and paper. Or, just stick with physical piggy banks, sock drawers, etc. I used a spreadsheet before I built FamZoo. But, frankly, I got really tired of manually updating it (I have 5 kids, so maybe that was part of the problem!
. I also wanted the kids to be able to sign in on their own and view their balances – just like a real bank, but a bank where we, the parents, made the rules (like interest rates meaningful to a little kid) in a way that was consistent with the money values/lessons we wanted to teach. And finally, whether we like it or not, our kids are growing up in an increasingly electronic world. I wanted my kids to understand as early as possible that electronic forms of money are VERY real indeed, and to understand through hands-on experience that you can get yourself in deep trouble if you don’t learn to manage ALL forms of money and keep a handle on your overall financial picture. Basically, I wanted training wheels for online banking/investing and electronic payment/credit so my kids could learn the ropes in a safe environment under our tutelage – before they hit the big time and got themselves in real trouble.
By automating it all through an application and a mobile app, the goal is to make it super simple for parents to be good money mentors (especially those parents who feel anxious about their own capabilities in this area). I wanted to make the whole experience more engaging/impactful for our increasingly tech-savvy kids. The neat thing is, with an application, we can add all sorts of interesting personal finance capabilities too: automated interest, savings planners, behavior history charts, expense accounts, budgeting tools, loans, investing simulations (someday), and so on.
So, what’s an appropriate price point for such a service? That’s ultimately for the market to decide. Putting it in perspective, is it worth the price of (less than) a latte a month to teach your kids a critical life skill? Lots of folks think so. You may not, and that’s totally OK. I can also tell you that it’s very costly to build and maintain a quality site. I suspect many of the “free” sites you see will go out of business as they come to grips with the economic realities of their business model (some already have) – unless, of course, they compromise their mission.
All of the above doesn’t mean you have to embrace a subscription site like ours or Three Jars. I just offer it as some food for thought and hopefully an interesting inside story on how one such provider arrived at the subscription business model decision.
One final thought: it is said with increasing frequency on the Internet: if you’re not paying for it, then you’re the product (i.e., YOU are being sold in one way or another whether you realize it or not – typically it’s your private data.) I happen to believe we’ll be seeing a bit of a backlash from all the “free” services out there as people realize the hidden price they’re really paying. In our case, it’s really simple though: we refuse to adopt a business model that runs counter to our mission of helping parents teach their kids good money habits.
Apologies for the long note, and if you’re still there, thanks for listening
Regards,
Bill Dwight, Founder & Chief Dad at FamZoo
October 30, 2012 at 2:44 am
Yay Gail!
Brenda, I’m afraid sometimes I’m just like your kids, spending money from my personal allowance on junky stuff, lol! Guess I’m still growing up, too.
October 30, 2012 at 6:52 am
I agree with Elizabeth – YAY GAIL!!
and a BIG THANK YOU for all the work you do for us, and the thought that goes into it. I truly appreciate it 
Thanks again, you are a remarkable woman 
Sheri
October 30, 2012 at 8:17 am
@Elizabeth A – LOL! Yes, I think we’ve all bought “junky” stuff and regretted it later! However, my youngest now really thinks about where she is spending her money. She found that buying cute cheap toys that broke were a waste of time – and MONEY! LOL! She is now saving for things she truly wants – and discusses it. That I figure, is a great lesson learned. I’m definitely not perfect either – I’ve had my share of buy now, regret later!
Thanks Gail for all you do for everyone….and even though I won’t be using the program, I appreciate all your suggestions. It definitely gets people talking!
October 30, 2012 at 8:26 am
I just opened 2 savings accounts to go along with my son’s chequing account with PC Financial. They’re free to open, and I can log in through my account to help him manage his money until he’s able to do it on his own. He’s just gotten a P/T job on weekends, so 50% stays in his savings acct for everyday spending, 25% goes into S-T savings/planned spending (for things like gifts, license fees, new skis/whatever), and the other 25% goes into L-T savings which will initially be to top up RESP and school spending, especially if having a P/T job interferes with grades during college/uni. If there’s any $ leftover after post-secondary, it’ll become his first RRSP contribution. Win/Win. Free and he gets to see his actual pay get divvied up. I still give him an allowance ($1/yr of age) as I see it contributing towards things I ordinarily would’ve still coughed up the $ for, like new runners, gym membership, whatevs.
October 30, 2012 at 11:11 am
Thank you for your informative post, Bill. In many ways, the internet has skewed how we regard services and what we think should be free. We’re seeing a shift now with pay walls on news sites and I suspect many other changes will accompany this shift.
Gail runs this site with minimum advertising and I’m sure doesn’t even cover her costs to host the site. But not everyone can afford this generosity. Thanks for the articulate reminder.
October 30, 2012 at 12:01 pm
@Julie – I really appreciate that you took the time to read through my comments. I also wanted to say that I think what you’re doing with Google Docs with your family is really cool: teaching your child both financial basics and spreadsheet basics is terrific. In fact, I actually spent some time a while back to see if I could recreate much of FamZoo’s core functionality in a Google Docs spreadsheet using their automation API. You can actually do quite a bit. The biggest drawback is that you can’t create a super simple, friendly user experience for a broad audience. But if your comfortable with spreadsheets and can either figure out how to automate the allowance/interest/etc delivery or don’t mind manually updating it, a shared Google Doc is a very neat way to go.
November 1, 2012 at 2:09 pm
I’m a little late coming to the party, but I am very glad to read that I am not the only one who that this was a good idea. Gail gave the pros and cons that she sees and the $30 was a turn off, but the concept was quite good. I personally started with the physical jar system and then moved to spreadsheets. Kids are so computer savy, I can totally see them relating to this. Like with any educational tool, you have to tailor it to your specific situation. Thanks for those of you (Bill, Karen, Julie, etc.) who saw some good in this suggestion and for not attacking Gail. I for one will be recommending this type of training tool to those I know with young kids. Thanks Gail for this post.
May 2, 2013 at 10:13 am
For a free alternative, I stumbled upon this today; http://www.virtualpiggy.com/