Help Your Children Visualize Money Mangement with the Four Jars Approach

by Michelle · 11 comments

When I was growing up, my parents would get the urge every once in awhile to impart money management skills to my siblings and me. They would experiment with different systems for dispensing allowances and organizing income, but most failed due to the lack of discipline on both their part and ours.
Not every system was a total failure though.  One such system, the Four-Jar Approach, involved each child possessing four plastic, transparent jars into which income was divided for four purposes: Spending, Retirement, College, and Taxes. Now that I think about it, I never knew where the taxes were supposed to go once they landed in the jar, and what we were being taxed on. Perhaps under the Four-Jar Approach, my parents were entitled to take administrative fees out of allowances.  But hey, if it was on purpose, it was cleverly executed.

Teaching children about finance is a subject I can’t touch on in too much detail given my scattered experiences, but one of the few worthwhile lessons of the jar system for me was that it helped me visualize the keys to personal finance in a straightforward way. They can see exactly how much money they have and how it gets physically divided for different purposes. If they drain their entire spending allotment, the empty jar is a nice visual reminder that nothing further can be bought until it is allowance time again.
As I got older, the four jars turned into a budget spreadsheet in Excel.  It’s now very easy to forget about a computer file throughout the week, or in the heat of a purchase.  I almost wish I had four jars sitting on my counter, or perhaps a few different thermometers hanging on the wall with their needles pointing to the red zone when I spend too much on clothes or eating out. However funny that would look in the house, it’s much better than an overdraw notice.
I’ve racked my brains to come up with new, groundbreaking ways to visualize money management, but I kept coming back to my budget worksheet. It might not be as much fun as keeping track of my funds in a set of jars, but the thing about being an adult is that you’re supposed to have less fun. Okay, that’s not quite what I mean, but I do think that having (or pursuing) the discipline to keep up with whatever type of budgeting system you use is part of being an adult. A small part of me still wishes the four jars would be adequate, but I will try my best to continue with Excel since I’ve had a fair amount of success with it.
What about you? Do you have any interesting systems for visualizing or managing your money that have worked for you?

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current Verizon FiOS promotion codes and promos to see if you can save more money every month from now on.

{ read the comments below or add one }

  • Kali says:

    I physically move my money into separate accounts every payday, so my urge to drain only hits the spending account.

  • John Vander Stel says:

    I wrote my own computer program that used virtual envelopes to handle my budget and cash flow back in 1981 on a Timex/Sinclair 1000 computer. To this day, I still use that program with a Timex/Sinclair 1000 emulator in a DOS window on my Windows XP computer and on a Windows 7 one, as well.

    I’m now running it in parallel with a new program like it on the web by someone else that does not use account numbers since it does not work with banks, at all. It simply works with only raw data you enter to handle your own personal budget. You enter purchase and withdrawal information manually in real time from anywhere at any time with any cell phone with Internet access.

    I access it via a proprietary Android program called EEBA (Easy Envelope Budget Aid) that automatically syncronizes that information between one or more Android phones and that website. It allows a married couple with a shared budget to know how much is in any envelope of their budget at any given time, and thus prevents them from over spending.



  • Meaghan says:

    Nice post. Teaching children about the value of a dollar and how to budget/ allocate money is a very important lesson. Learning now can help keep them out of debt later.

  • Travis says:

    While I’ve never heard it given the name “jars approach,” nonetheless I’m well familiar with the method you’re using here. It is a nice reminder for children, and even adults I’d say. Seems like a lot of them are worse than kids are at spending more than they have, and could probably do a nice reminder here and there on their spending habits.

  • Jason @ One Money Design says:

    Michelle, I have two young children and I’m thinking of soon starting a similar approach with our older one. Versus 4 jars, I’m going to use a 3 penny bank approach with giving, saving and spending banks which I think are good principles to teach at a young age.

    In terms of tracking money, I like Mvelopes. You can use electronic envelopes (instead of physical) to manage your money. They work just like physical envelopes in that you can transfer money between them if needed.

  • Jane Vedell says:

    I use Excel, too. Usually, when I’m on the computer, I’ll pull up my budget sheet and see where I’m at. It’s an Excel version of your jar method though I’d always thought of them as buckets. 🙂

    I’ve got one savings account, but lots of different buckets of what I’m saving for monthly. For example, the twice yearly car insurance, yearly car registration, and car repair go in one bucket. Another is for yearly medical expenses. Another for my yearly bunny expenses. And so on. Along with my monthly expenses. That way I see how much I actually have for each bucket.

  • Jodi says:

    I love the four jars idea and will be trying it out over the weekend with my kids. I don’t know if the tax thing will go over too well though but we shall see.

  • MoneyNing says:

    I use Excel, not so much because I love it but because it’s simple and the quickest way for me to log in an expense (once I set it up of course).

    Mint’s another good tool that many people love.

  • Mike Piper says:

    Excel rocks my world. Perhaps it works better for me than for others because I pretty much think in terms of spreadsheets. (Ah…the life of an accountant.) 😉

  • Daniel @ Sweating The Big Stuff says:

    When I was young, I got 4 dollars, and I was free to do anything I wanted with it. I saved it. I guess that explains why I read a lot of personal finance blogs.

    I really like Mint, they have tons of visual tools which is nice because something different appeals to each person based on their tastes. Seeing numbers doesn’t always have an impact, but like you said, the thermometer type tracker really helps me stay within my budget and see how I’ve done.

    • Michelle says:

      I think Mint is great too, but unfortunately I can’t get it to synch with my checking account (I’m told it’s because of the security features on my bank’s website). It seems that Mint isn’t doing much to solve the problem, so I’d have to switch banks to be able to get any real use out of Mint. Such a shame, because Mint really does have some cool ways to visualize your money.

Leave a Comment