Money Jar Savings Method for Children

To teach the children about the concept of savings is like to ask them to eat vegetable or chillies. It's almost impossible! I believe most parents will agree with me that children nowadays are very tempted with all the toys and gadgets in the market today. The children will probably bugged you everyday for the toy they like, until you give in.

So, how do you solve this problem? You can either give in and buy them the toys, but for the parents, it's a losing battle for them. Once the children get their ways, they will smartly use the same method again for the things they want. Alternatively, you can teach them the concept of savings and delayed gratification. Sounds tough huh?

Here's how i do it. It's called Money Jar Savings Method. There are a few variables of Money Jar Savings method, like 3-jar system or 5-jar system. What i preach to my children is the 3-jar system. Basically, you have to prepare 3 piggy bank/jars (preferably transparent) to start the savings.

For the first jar, I will tell my children that this is for them to save for their own goodies, such as sweets, toys and gadgets. When you tell them this, I'm sure you will get them excited already! But to teach them delayed gratification, this jar will receive the smallest savings portion so that it will take a while longer to save enough for them to buy goodies. For me, I will save 20 cents a day for them.

The second jar is for them to buy their school necessities, like school bags, pencil cases, books, shoes and etc. This normally excites them as well since most of them fancies the latest bags/shoes/pencil cases to show off to other kids. For the second jar, I saved 50 cents a day for them.

And now for the third and final jar, i will tell them this savings jar is for them when they grow up. This jar is meant for long term savings for the kids. From my experience, the children will be disappointed with this third jar since they cannot visualize what's there for them and they dont understand the meaning long term savings. But, it's ok. They dont have to understand about the usefulness of the third jar. For this third jar, I saved 1 dollar for them a day.

So now you have the 3-jar savings system. The idea of having transparent jars is that the children will get to see the money grows inside the jars and this will get them excited to save more. Will this work for your children? Why don't you try it? I'm quite sure it works wonders. Of course, we as the parent should have the discipline to do the savings part.

Once you have enough savings and the jars are full, it's time for you to keep the money in the bank. One option is to keep these money in the junior savings account where you can potentially earn more interests than the normal savings accounts. To find out more about junior savings account, go here.

Comparison of Junior Savings Account

Updated 5/9/2012: Updated latest interest rates for some of the products.

As a parent myself, it is never to early to teach your children about the concept of savings. Even though the children might not understand the meaning for the savings, but if we as the parent, make savings as a part of daily fun activities, the kids will definitely enjoy it and appreciate it more. Experts have came out with many methods and systems that can encourage the children to learn the savings concept, but personally I'm practicing the Money Jar method. I will elaborate more about this Money Jar method in my next article.

So now, we've got some savings for our children and what do we do with it? Some people will invest the money in unit trusts or stock market. There's nothing wrong with this, but the savings quantum must be quite big to make a big difference. For small savings, naturally we are looking for a savings account for children.

There are plenty of children savings accounts in the market. The common features of these children/junior savings accounts are:

• Higher interest rate as compared to normal savings accounts
• Limited number of withdrawal per month
• Limited withdrawal method (normally OTC withdrawal only)
• Low account opening sum, as low as RM 1
• Rewards / Incentives, i.e. cash rewards for excellent exam results, free personal accident coverage etc.

Asset Allocation - End June 2011

Portfolio review for Q2 2011 has been way overdue and I would like to apologize for the delay in updates to my portfolio holdings and its performance.

As compared to my portfolio in Q1 2011, there is some minor changes to the fund compositions in my Q2 2011 portfolio. I've switched my OSK-UOB Asian Growth Opportunities Fund (AGO) to OSK-UOB Resources Fund (RESO) as I feel that AGO fund is too volatile for my liking, even though i was making some profit on this fund. I've decided to concentrate my Asia Pacific ex-Japan exposure to only a single fund, Public Far East Select Fund (PFES).

Since I've switched to OSK-UOB Resources Fund (RESO), this fund will be my main fund for exposure to resources sector, although the resources exposure is limited to AP ex-Japan region, as compared to the global nature of previous holding of Pacific Global Agriculture, Infrastructure & Resources Fund (GAIR). I've disposed off GAIR fund in Q2 due to lack of performance as well as limited fund size.

The music will stop

I would like to share an article that I came across regarding the madness of property prices in Malaysia currently. As more and more property launches come with exorbitant prices that are beyond the income level of many workers particularly in key cities of Klang Valley, Penang and Johor Bahru, my gut feeling is that the property market is in a bubble stage and might see some softening moving forward.

So, for those who are highly leveraged with housing loans, do have a good read on the article and reflect on what the writer who has seen the ups and downs of property cycles is saying.

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