Teens and Adults: Learn About the Power of Money
Here’s a proven approach for developing strong budgeting and spending habits, based on the method developed by T. Harv Eker. Parents can use it to prepare a teen or pre-teen for future independence. Or you could use this system to hone your own healthy spending and saving habits.
Begin with this method of dividing income to meet 6 different needs and goals. Your Financial Advisor can help you with investment strategies to take this method even farther.
Creating a future of success and financial confidence requires specific life skills. Instilling financial literacy is a valuable investment in your future.
Adults can use bank accounts. Teens and pre-teens can use six different money jars.
Jar 1: Living. Allocate 50%. Since teens are sheltered within the family home, they may skip this jar and together you can plan how to re- allocate their money to the other jars. For adults: your goal is putting half your income into this jar to provide for the necessities of life. The other half goes for other purposes.
Jar 2: Savings. Allocate 10%. This jar is for planning and achieving a specific goal. For teens, it helps them learn to save for something they want. Adults can use this jar to save for big-ticket items such as a car or house.
Jar 3: Learning. Allocate 10%. This jar is about the value of life- long learning. Your teen will use it to save for higher education. As an adult, you can save for a course you really want to take. The freedom to learn, for life: save for it and value your dreams.
Jar 4: Giving. Allocate 10%. This lesson is about gratitude and giving back. Your teen gives a portion of his or her money to a cause they alone choose. Or you choose one for yourself.
Jar 5: Fun. Allocate 10%. For both teens and adults, this money has to be spent frivolously. Because, if financial planning includes stripping all the fun out of life, you will both resent it.
Jar 6: Freedom. Allocate 10%. This jar is about creating a prosperous future. You can encourage your teen to learn about buying investments. The sooner they learn, the better they will get. Adults will use the money for investing or retirement planning.
Learn how to create an abundant, satisfying future with a balanced approach to saving and spending. Your Financial Advisor can support your teen, or you, with investing and other financial strategies to go along with this method.