Proven strategies to arm your kids with more financial literacy than the common, broke adult
Here are the practical steps I took to give my kids the best possible financial future… without giving them money
My son is going to buy a Cybertruck.
You know, the shiny garbage trucks that look like they came out of an early 90s Super Nintendo video game and haven’t yet fully rendered.
“Do a barrel roll!” (Deep cut for my fellow Star Fox fans.)
He doesn’t have $75,000 yet but I’m confident he’ll get there.
He’s 14 years old.
I’ve been teaching him about financial literacy since he first laid eyes on a dollar bill.
It won’t matter how much money he makes in his lifetime if he doesn’t learn how to handle it. You can’t out-earn stupid.
While his friends are spending their weeknights playing video games and watching Netflix, my son is working the drive thru at a local fast food restaurant. And pay period by pay period he’s getting closer to his goal of Elon’s ugliest vehicle to date.
I didn’t push him to get a job. He made up his own mind to start working as soon as he was of legal age to do so. In fact, I’d rather he not yet dive headfirst into the world of work.
Regardless, every Wednesday, Thursday, and Friday night, he dons his uniform and makes an honest living.
The 3 Jars
The first lesson I taught my kids was to pay their future selves. When they first started receiving cash from birthdays, Christmases, and other events, I gave them 3 jars.
Jar 1 was for Giving. 10% of their money would be set aside here.
Jar 2 was for Saving. This was a variable amount but was anywhere between 25-50%.
Jar 3 was for Spending. The remaining money would go here.
Any time they wanted to buy something, they would take money from Jar 3.
When we went to church on Sundays, they would put their Jar 1 money into the basket.
And if they had loftier goals like a truck run on electrons, they needed to fill Jar 2.
This worked well in their pre-teen years.
But since we all live in the 2020s, our methods have evolved. While cash may be king, plastic cards rule the land. So we needed to adapt.
The Digitization of Jars
Enter FamZoo.
FamZoo is one of many companies that aims to ease kids into good financial practices by giving them training wheels. I was attracted to it as I was looking for something a bit more modern than glass jars.
There are a couple of ways to configure your FamZoo experience. Here’s how I’ve set it up.
I own the primary account from which I can deposit funds into.
Each child has two accounts: 1 savings and 1 checking.
Each child has a debit card linked to their checking account.
Now let’s run through a typical scenario.
My son receives $50 in cash from their grandparents as a birthday gift.
They hand me the cash.
I transfer $50 from my bank to FamZoo. (I’m able to do this from my Apple Wallet which is pretty slick.)
Once the $50 is in FamZoo (typically in 2-3 days), I transfer the money to my son’s FamZoo checking account. This happens almost immediately.
My son can then choose how much of that $50 to sock away into his savings account.
It works out pretty well and my kids no longer need to worry about dropping glass jars at the local Target.
Getting Interested in Savings
To incentivize them to save, the FamZoo savings account has an added benefit — interest.
I’m able to set an interest rate of my choosing. It’s currently at 0.5% which pays out on a weekly basis. That may not seem like much but it’s been enough to get them in the habit of saving.
After a few short years, both of my teen-aged boys have over $1,000 in their savings accounts and have hit the weekly cap I’ve set of $5.
As for their respective paychecks, FamZoo provides the requisite routing and account numbers required for direct deposit.
There are, however, a few downsides to FamZoo.
Once money makes its way into the FamZoo ecosystem, it’s hard to pull it out. It needs to be spent. There might be a way to do access this money without a transaction although I haven’t discovered one yet.
For workplaces that don’t offer direct deposit, there isn’t a physical bank I can visit to make a deposit with FamZoo.
My son gets a live check from one of his jobs. It’s a two-step process to get it into FamZoo. First I need to deposit it into my personal account and then transfer it to FamZoo.
There is a limit of $5,000 per FamZoo account. This may eventually become a problem as I’ve already mentioned that each of my boys has saved over $1,000 each.
Leveling Up Financial Literacy
After a few years of being a loyal customer, my kids are ready to graduate to opening their own checking accounts from a major bank. They’re already authorized users on my credit card which is teaching them how to responsibly handle credit as well as to start building their credit history.
Finally, they each have their own brokerage accounts where they are learning to select and purchase stocks.
They may not remember the jars or the FamZoo accounts, but the lessons they’re learning now will enable them to handle their growing incomes in the future.
Do you need to do all of this? Definitely not, but I would encourage you if you have children to start instilling the financial literacy that will serve them in their adult years.
Pay yourself first.
Set aside money for giving.
Pay your credit cards in full every month.
Invest your money.
You’ll need to decide when the right time is to start these lessons with your children.
How do you teach your kids about good money habits? Let me know in the comments.
P.S. If you’d like to learn more about this topic or how you can start living a Min-Max Life, book a free 30-minute call with me.
Here’s my 𝕏 post of the week.
Thank you for this! So many people don't learn simple money management and certainly don't pass it on to their children.