Parenting Tip 1: How to Teach Kids About Money: 3 Jars That Build Financially Smart Kids

A step-by-step guide for parents to raise financially confident kids, inspired by the children's book "Luna's Three Money Jars."

Are you wondering how to teach your kids about money, but are not sure where to start? You are not alone. Many of us grew up in homes where money was never discussed. As adults, we had to figure it out on our own, often making mistakes along the way. But it does not have to be that way for our children.

Teaching financial literacy to kids as young as 3 years old is entirely possible, and it can be incredibly fun. The secret is keeping it simple, visual, and hands-on. That is where the Three Money Jar Method comes in.

In this guide, we will explore how to use the SAVE, SPEND, and SHARE jars to build a strong financial foundation for your child, drawing on lessons from the heartwarming children's book Luna's Three Money Jars.

Why Start Teaching Financial Literacy Early?

Children are like sponges. By age three, they can grasp basic economic concepts like value and exchange. By age seven, many of their money habits are already taking shape. When you start early, you give your child a gift that grows over time. They learn financial knowledge and the confidence to make choices that reflect their values.

The goal is not to overwhelm them with complex budgeting spreadsheets. Instead, we want to teach them two powerful lessons:

1. How to create value (earning)
2. How to manage what we have (budgeting)

The Three Money Jar Method Explained

The Three Money Jar Method is a visual budgeting system perfect for kids ages 3 to 8. Instead of putting all their money into a single piggy bank, children divide their money into three clear jars: SAVE, SPEND, and SHARE.

Using clear jars is crucial. Kids need to see their money growing. It makes the abstract concept of money tangible and real.

1. The SAVE Jar: Building Patience and Goal Setting

The SAVE jar is for long-term goals. It teaches patience and the rewards of waiting for a big dream.

In Luna's Three Money Jars, Luna sets her sights on a big blue scooter. Every time she earns a dollar, a portion goes into her SAVE jar. Watching the jar fill up keeps her motivated. When she finally pours the money onto her bedroom floor and realizes she has enough, the sense of pride is immeasurable.

Parent Tip: Help your child pick a specific, achievable goal for their SAVE jar. Print out a picture of the item and tape it to the jar. Ask them, "What dream are you saving up for?"

2. The SPEND Jar: Fostering Decision Making and Confidence

The SPEND jar is for immediate gratification. It teaches decision-making skills, confidence, and the understanding that money is a tool for joy.

Luna uses her SPEND jar to buy a sweet mango candy at the market. She gets to be the "boss of her money." Allowing your child to make their own spending choices, even if they buy something you think is silly, is a vital part of the learning process. They learn the value of a dollar and the reality of trade-offs. Once the SPEND money is gone, it is gone.

Parent Tip: Let your child physically hand the money to the cashier when they buy something with their SPEND jar. It reinforces the exchange of money for goods.

3. The SHARE Jar: Cultivating Generosity and Empathy

The SHARE jar is for helping others. It teaches generosity and shows children how they can make a positive impact on the world.

In the story, Luna sees her friend Leo looking sad because his toy robot is broken. She remembers her heavy, full SHARE jar at home and knows exactly what to do. She uses her money to help Leo get a new robot.

Parent Tip: Involve your child in deciding where the SHARE money goes. You can ask, "Who could we help with your Share jar?" It could be buying pet food for a local animal shelter, donating to a charity, or helping a friend in need.

My Favorite Money Tools for Ages 3 to 8

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To make the Save, Spend, Share system easy and fun, you do not need anything complicated. A few simple tools can help your child stay engaged and excited about learning. Here are a few of my favorite beginner-friendly tools for ages 3 to 8.

1. Save, Spend, Share Moneybox - Money jars or boxes help kids see their money grow, making saving feel more real and exciting.
2. Kid budget binder - A fun and visual way for kids to track their money, set goals, and stay organized as they learn to save and spend.
3. Chore chart for kids - A chore chart helps connect effort with earning in a way kids can understand.
4. Play cash register or play money set - These are great for practicing money habits before using more real cash.
5. Money game for kids - Money games make learning about saving and spending fun and interactive. Through play, kids can practice making choices, understanding value, and building confidence with money in a low-pressure way.
6. Children’s money books - Books are one of the most effective ways to introduce money concepts to young kids. Stories help children understand ideas like saving, patience, and making smart choices in a way that feels relatable and engaging.

How to Implement the System at Home

Ready to start? Here is a simple, step-by-step guide to setting up the Three Money Jar Method in your home.

What you need to start today: 3 clear jars, simple labels, and a basic chore chart.

Step 1: Get Your Jars and Labels: Find three clear plastic or glass jars. You can use mason jars, recycled pasta sauce jars, or clear plastic containers. Head over to this link to download free, printable SAVE, SPEND, and SHARE jar labels, plus fun activity sheets!

Step 2: Establish an Earning System: Children need money to manage. While gifts (like the lucky red envelope Luna receives from her Grandma ) are great, earning money teaches the connection between work and value. Set up a simple chore chart. In the book, Luna earns one dollar for every chore she completes, such as watering the garden, folding the laundry, and cleaning her room. Keep the chores age-appropriate.

Step 3: Decide on the Split: When payday arrives, help your child divide their earnings among the three jars. There is no perfect formula for splitting the money. Some families use a 40/40/20 split (40% Save, 40% Spend, 20% Share), while others divide it equally. Consistency and open conversation are what matter most. Ask your child, "How does it feel to earn that dollar?"

Step 4: Read and Reflect Together: Books are powerful tools for starting conversations. Reading Luna’s Three Money Jars together helps bring these money concepts to life in a way young kids can understand and enjoy.

Final Thoughts

Teaching your kids about money does not have to be intimidating. If your child learns best through stories, this is exactly why I wrote Luna’s Three Money Jars. It helps bring these concepts to life in a way kids can understand and enjoy.

Remember, you are not just teaching them about dollars and cents. You are teaching them patience, decision-making, and empathy. You are giving them a foundation that will last a lifetime.