Sadly, according to the JumpStart Coalition for Financial Literacy only 26% of 13-21 year olds surveyed said that their parents taught them how to manage money. This is just one of many startling statistics out there about the financial literacy of today’s youth. In order to ensure that kids today have all the tools they need to be financially successful in the future they need to start learning money management skills as young as possible. Yet for some reason school systems in America aren’t doing enough. Luckily there is a plethora of tools to assist parents in teaching their kids about money; one tool being the virtual piggy bank.
When I say virtual piggy banks I am talking about sites out there such as ThreeJars, Zefty, PlayMoolah, KidsCash and Kashpile. The first thing to understand is that these sites are not actually banks. They don’t actually hold the child’s money. The parent acts as a trustee, holding the cash somewhere so it is available when the child decides to use it. Let’s look at ThreeJars as an example.
Using ThreeJars, parents pay for odd jobs around the house, allowance, or baby-sitting with IOUs. Those IOUs represent real money. Each kid has their own site where they manage their money (aka IOUs) by sending requests that parents can deny or approve. Children have 3 jars, save, spend, and share. Kid’s save a portion of every IOU in the save jar. Parents can even encourage saving by paying interest on the balance in the save jar. Money in the spend jar can be used to buy things online (coming soon) or requested as cash. Once parents approve the spend jar request the IOU balance is automatically reduced and parents hand over the cash. Children can even learn the importance of giving back by putting money in there share jar to donate to charity. Parents can easily deposit and withdraw money through their cellphones, email, or on the site. It is also a great way to assign and manage chores.
Each of the sites listed above offers a similar service but each has slightly different features. I can’t say that one is better than the next as I have not used one, but I can say I think this is a great way to teach kids money management and get them involved. It makes learning about money more interesting and children want to me more engaged because it is actually their money; it isn’t a game.
Virtual Piggy Banks are just one of many ways to help kids learn about money and ensure that they are financially prepared for life. How do you teach your kids about money? Do you use one of these websites?