Financial Literacy is a topic that many people find is important for us to learn as adults or even as teenagers but not many people see the importance of teaching it to young children. This is why I was thrilled to see a product catering to children that would empower them to make financial decisions.
First, what is Financial Literacy? Financial Literacy is the education and understanding of finances. It is the ability to manage personal finance matters in the most efficient manner, and it includes the knowledge to make appropriate decisions about personal finance such as investing, savings, budgeting, retirement, etc.
Now, it is time to introduce you to 4 Pocket Allowance and how it is a great tool in helping children learn about financial literacy.
The 4 Pocket Allowance is a comprehensive allowance system that guides kids in allocating money into four different pockets.
There is the Spending pocket which is where money is allocated for special treats like a trip to the dollar store or for playing cards. Then there is the Saving pocket which is saving for a specific goal like a larger purchase such as a bike, or spending money for a family vacation. The third pocket is the Giving which is where money is allocated to be used for selfless acts such as a charitable donation or a gift for a friend. The fourth pocket is the Investing where money that is set aside for long term goal like an education fund or stock account.
This kit also includes a fifth pocket which is labelled as “Reserve” and it is for parents to stockpile small denominations (bills, coins) to avoid a weekly scramble, and the inevitable problems of constantly trying to break a $20 bill. The kit comes in a fun binder with a magnetic closure, and also includes printed material and an allowance worksheet – everything you need to get you going, and to keep you on track.
How 4 Pocket Allowance Works
Starting early is good and kids of any age will learn from applying good money management principles. Here is how 4 Pocket Allowance works:
- Get organized. First complete the “My Pocket Allowance” worksheet provided.
- Decide whether the 4 pockets will apply to other income such as birthday money, special occasions, etc.
- Fill the Reserve and store it for allowance day.
- Introduce the 4 Pocket Allowance at your family meeting.
- Then follow your worksheet on the schedule that you have followed. For example the allowance can be $20 every two weeks.
#MelAndNikkiReview on 4 Pocket Allowance
I am no stranger to financial literacy and teaching money management but never would have thought to start at my child’s age of three. However, this method is so intriguing and fun that I implemented it right away.
I know that it will take some time for my daughter to get the hang of it but I know with some hard work and patience we will get there. We explained what each pocket was and we let her decide for the first round how much would go in each. Her favorite pocket was the Saving one as she was excited to have some spending money on our family vacation trip. This is such a great way to start teaching our daughter about money and how to better manage it so this is why we give it 5 stars out of 5! We are excited to see how this is going to work for our family and the impact it will have on our daughter’s life growing up.
The 4 Pocket Allowance Benefit
“Kids will face various money related decisions throughout their lives, and their experiences growing up will influence their life-long relationship with money. In other words, teach kids the basics of good money management that they will use for the rest of their lives.
An allowance is about so much more than just giving kids money to spend.”
4 Pocket Allowance is:
- Empowering kids to make decisions and hopefully learn from them.
- Guiding them to appreciate the value of money.
- Establishing model saving habits.
- Broadening awareness of how money can be used.
- Resolving endless requests that make parents cringe: “Can you buy me this?”
The benefits sound great and it is a fun tool to use. If you would like to purchase the 4 Pocket Allowance, click here. Would love to hear your thoughts in the comment section below if you have purchased one and how you are enjoying it. I know that we are enjoying it so far! 🙂
Until next time…Happy Parenting!