From Tony Townsley, CPA
Many years ago, before starting a family, my wife Susan and I agreed we would to teach our children about money at an early age.
So, we decided to give them a weekly allowance of one dollar each week for every year of age and when they turned five years old, we would divide their allowance into “Three Cups” clearly marked: “Savings Cup”, “Spending Cup” and “Charity Cup”.
Since that time, each and every Saturday, we have given our son, Jake, and our daughter, Emma their allowance and it has been divided into each of their three cups. Both Jake and Emma have been required to do chores around the house as part of their family responsibility from the onset. But, we never wanted to “pay them” for merely “helping around the house”, nor did we want to put a price on each of the chores we asked them to do. Instead, we gave them an allowance (requiring them to divide it into the three cups) to teach them about money management.
When they each turned 5 years old, 70% of their allowance was put into their “Savings Cup”, 20% into their “Spending Cup” and 10% into their “Charity Cup”. As they got older, more money has been placed into their “Spending Cup” and less in their “Savings Cup”. By age 18, 20% of their allowance will be placed into their “Savings Cup”, 70% into their “Spending Cup” and 10% will continue to be placed into their “Charity Cup”. Our goal is for Jake and Emma, as adults, to continue to allocate the money they earn into three cups based on having helped them create positive habits and discipline with their money when they were children.
In the beginning, every couple of weeks we took our children to the bank to deposit their “Savings Cup” money. At first, they didn’t want to go because they wanted to see (in person and for themselves) their money accumulate in their cups, but they soon learned the bank paid them interest to hold their money for them and they could also get a sucker during each trip. As the years have gone by, Jake and Emma have invested their money in CDs, stocks and mutual funds. And, recently, they have begun to decide how it is invested.
The “Spending Cup” is used to teach them about how to stretch their money to buy the things they want to purchase. By saving their own money to buy things they want, they gain a lot of personal satisfaction. We teach them to be patient by comparison shopping and watching for sales or to use coupons to save money for what they want to buy.
The “Charity Cup” is our favorite cup. Our children give one half of their charity money each week to our church. The other half accumulates and they pick what charities they would like to give to. Over the years, they have donated to food pantries, The Humane Society, American Red Cross, Children’s Hospitals and many other charitable causes. We have also taught them to be good stewards with their time as well, volunteering for different charitable groups.
As we had hoped, these three, little cups have led our entire family on many wonderful adventures and inspired us to share our life-affirming experiences with others through a best-selling and award-winning children’s book we self-published with friends entitled, Three Cups (which includes a “How-To/Parents Guide). You could say that our book is a financial literacy tool for the entire family - for children, parents and grandparents alike.
Our country is experiencing unprecedented economic challenges right now, making the lessons Three Cups teaches quite timely. Imagine how different our lives would be if we learned how to manage our money as children and not when we are older and find ourselves in a difficult financial situation.
The book is available at www.3cupsbook.com . What a different world it would be if every child had a copy of Three Cups and followed its simple teachings and tenants.