The Three Jar System Of Money To Discuss Our Financial Insecurities

Three Money Jars by Colleen Kong

Three Money Jars by Colleen Kong-Savage

Greetings from London! I’ll be away until July 1. In the meantime, please enjoy the following guest post from illustrator and writer Colleen on her insecurities with money. Perhaps you have some financial insecurities as well you’d like to share in the comments section. 

I was going to write a post about kids allowances. How much do people give their kids these days? Do they tie allowances to doing household chores? Are kids allowed to spend their cash on whatever they want? That’s what I was going to write about, except I was bored before I even began typing.

When I surveyed some friends on Facebook, nobody would say what the going rate for allowance was in their household. People just ignored that first question and moved on to tell me that they don’t tie allowance to chores because they want to teach their kids the intrinsic value of pitching in to take care of the home together (a few found payment for chores more effective—you gotta admit picking up dog poo IS a nasty job worth at least 50 cents).

I wanted to know how much people paid their kids. Surely that’s not a touchy subject like asking individual ADULTS how much they make at their jobs. But the ten people who responded to my survey either did not or would not say. I figured I’d start asking my son’s friends, feeling a little sneaky about getting the answer from the horses’ mouths, but the first friend deftly dodged the question (I asked her twice), so I figured maybe it wasn’t such a great idea being a nosy body, especially when I wasn’t all that interested. I did learn about a three-jar system some folks use to teach their kids money management: a jar to keep cash for Saving, a jar of cash for Spending, and a jar of cash for Giving. I never heard of that before, so I did find THAT interesting.

Cash, dough, bread, greenbacks, cabbage, moola. All these names, but talking money is a big fat taboo. Why? I’m curious about the salaries of friends and acquaintances, but I will never ask the specific number. The question is not meant to be asked. But if we can agree that money does not define who we are, and a salary figure is only one factoid among many that describe us, then why is the subject of personal finance so loaded? Wait, let me take off these rose-colored glasses… Despite the niceties, we know society is still judgmental, and we are insecure about our self-worth. We don’t want to be judged. Not only that, we don’t want to be taken advantage of.

How do we judge thee by thy money? Let me count the ways. In fact let’s use the three-jar system for fun. I’m going to fill each jar with common hangups, neuroses, and prejudices that surround the the topics of Savings, Spending, and Giving.

THREE JARS LOADED WITH FINANCIAL INSECURITIES

The Jar of Savings

Saving Jar Colleen KongMaybe your folks set up a trust fund for you. Oh, so your parents have spoiled you, lucky dog. Are you worthy of that million in the bank? You probably have no idea what it’s like to work for a living. You’re a trust fund baby; baby being the operative word.

The grown up thing to do would be to build your own nest egg. Save for a rainy day. That’s being responsible… oh wait are you living from paycheck to paycheck? No? You’re fine? So you have a “real job” then. How much do you put into your 401k? You wonder if you really have to contribute to it because your income is already whittled away by social security, among other governmental pinchings, and social security is saving, isn’t it?

If you aren’t putting more funds aside, are you being irresponsible and shortsighted. What’s an IRA again? Bonds, stocks, CD’s, what? You feel like an idiot because you don’t understand the mechanics of investment, and it’s giving you all kinds of heart palpitations.

The Jar of Spending

Spending Jar Colleen KongHow much do you spend? Do you deserve expensive things? Are you mature enough to draw up a budget? Are you careless and spend beyond your means? You purchased your dream house, except now you can’t afford to furnish it. Was that stupid? Do you often buy stupid items? Like expensive shoes that don’t go with anything in your wardrobe, or two gallons of ketchup because the store had a two-for-one special? Are you addicted to the home-shopping network? Gambling? How much of your paycheck goes to drinking yourself silly in trendy nightclubs? Are you extravagant? A first-class frequent flier, a champagne guzzler, and occupier of prime seats for Broadway shows. You might be ridiculously rich, or you might be ridiculously indulgent. Or are you choosing to enjoy life?

Maybe you’re pinching pennies. Are you embarrassed and sick of being broke? When your friends gather, you skip half the time because you can’t afford to eat out every night, and you’re tired of them covering for you even though you know they would. If you have a family, can you support your loved ones without loans or welfare? Hmmm… Shall you preserve your pride or feed the kids this week?

Or maybe you’re a miser. Do you forego taste and quality to save a few bucks? Are you the reason why the group comes up short when everybody chips in to pay the restaurant bill? Do you haggle with every service provider you enlist? From the babysitter to the therapist to the guy who put together your website, you demand a special deal for being a “good client.” Are you a tightwad or do you have better business sense than your peers?

The Jar of Giving

Giving Jar by Colleen KongHow much do you give? And to whom? Do you give to panhandlers? Are they all lazy unemployed alcoholics? That sad woman on the train who turned 67 on this warm summer day, she’s past retirement and wouldn’t spend your dollar on drugs. You wouldn’t be so callous as to deny a dollar from someone who could be your grandmother? It’s just that three years later she’s still celebrating her 67th birthday and it’s winter. Man, are you gullible.

Do you give to charities? Including NPR and your local park conservatory because you listen to public radio and run past the landscaped trees everyday? Do you respond to street solicitations because you care about the environment? Do you tip well? Even if your waiter was disinterested and forgetful?

Do you give to your friends? Buy them a round of drinks? Dinner? People like you for your generosity. Or maybe you just know that it’s your turn to pick up the bill. When you go to a birthday party, how much do you spend on a gift (if you bring a gift at all)? If you spend less than everyone else, you must be a cheapskate. If you spend more than everyone else, you feel like you spent more than you had to. If you spend a LOT more, you might have overdone it and be deemed inappropriately extravagant. Awkward. You have the right to hang on to 100% of your hard-earned money, but wouldn’t that be considered selfish and miserly?

OWN YOUR IDENTITY

Having spewed all these hypotheticals, I will now boil down all our money insecurities down to these three fears: Are you tight with your money, thus a miserly being? Are you foolish with your money, thus not to be taken seriously? Does your money speak your worth?

Can you measure a person’s worth with money? You better not, not with women still making 77 cents to men’s dollar. On the flip side of gender inequality, those surplus 23 cents a man makes often go towards buying a woman a drink at the bar and picking up the tab on dates. Many women like to ogle a guy’s paycheck, the longer the number the better. Rich = Successful = Great Mate. Earning power is still half the feathers in the peacock’s tail.

Gender stereotypes are embedded in our gut. Even if a man intellectually understands that his gender does not require him to be the breadwinner in a household, he has a knee-jerk response of feeling emasculated when circumstances shift and he suddenly finds that he must rely on his female partner to survive.

How much money do you make at your job? Does your bigger check mean that your skill is more valuable than mine? More difficult to master? Is caring for people in a nursing home worth less than managing a corporation’s legal affairs? A doctor friend of mine caught a glimpse at her Wall Street friend’s paycheck one day. A little miffed, she observed, “I save lives, but I make $250 grand to her $3 million.” Do you deserve your money? Do you make millions while the folks who assemble your product barely have enough to live on? Are you a slumlord?

The taboo of talking money is there to keep us from kicking the hornet’s nest. I don’t know if the judgement is greater from outside forces or from within. We know we are not our paycheck (or lack thereof), but we can’t help but let it eat at—or build up—our self-esteem.

So please don’t ask me how much money I earn or what I spend on rent. I’m already carrying the weight of my own insecurities and could’t bear the extra burden of your assessment. But I don’t mind telling you that I pay my nine-year-old son a single dollar a week for his allowance (am I cheap?). At least when I remember to pay him, I do. He never asks for it because he doesn’t think about money. Not really anyways, not until he wants something that I don’t want to get him. Then he remembers the green bills accruing in his desk drawer and uses them to purchase stuff like a watch, a harmonica, or a twentieth lego set. That’s what the money is there for: buying stuff. No more, no less.

Readers, do you have financial insecurities? If so, what are they? How did you get over them, or how do you plan to get over them?

Colleen recently started a children’s website kongaline.com that shares her stories, illustrations if you’d like to take a look. 

Colleen Kong-Savage
Illustration & Design
917-596-8376
http://www.kongsavage.com

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. Financial Samurai says

    I’ll go first. My first financial insecurity started in high school when I felt I wouldn’t be able to make enough money to take a girl out on a nice date (dinner and movie and transportation). I drove a $2,000 Toyota Corolla Hatchback and felt a little embarrassed. As a result, I worked summer jobs for $4 an hour to gain more security to be able to afford such outings.

    In college, I felt financial insecurity not knowing whether I’d be able to get a good enough job in order to prove to my parents that sending me to college was worth it.

    Post college, I feared that I wouldn’t last in finance for the long term due to the stress and workload. So I saved like a maniac in order to have the option to get out early.

    Now… I’m not sure. I wonder how much college education will cost in 20 years. Whether there’s a better way to educate our children. I wonder how society will be if the wealth gap continues to widen. I wonder if I will be left behind if I don’t continuously build assets in my portfolio.

    But taking a step back, I realize I’m lucky to have the opportunity to try and improve my financial situation. That’s all I ask.

  2. Mark Ferguson says

    My biggest insecurity came when I started making good money as a realtor in my late 20′s. I started thinking what if I can’t keep this up, what if I lose my Reo accounts?

    The. I realized the worst case scenario was I go back o where I made less money. I still would survive and be just fine. That’s when my career took off.

    Last week I took delivery of a lamborghini diablo and I am still able to save, invest and make money without stress.

  3. Getting There says

    I have a couple insecurities, one is that I may have started too late to plan for my future. Now I am actually OK right now because, even though I did SO many things wrong when I was younger, I was lucky in some investments that I held on to for the long haul and ended up accruing substantial gains. The issue is that right now that money is still tied up in those investments so it doesn’t really generate anything for me in a passive income stream, thus I have no real idea what to expect when I finally switch it over. This will happen long before I retire though :)

    Second one is bad advice or scam artists. I’m a different person today than I was 20 some years ago but back then I knew NOTHING about the market. Someone gave my name to a Hibbard Brown broker and at the time I knew no better. It was high pressure when I wasn’t making much money and every penny mattered. I ended up losing money and picking up a years long distrust of the investment community from them.

    • Colleen says

      Sounds like life-lessons learned firsthand—those lessons are valuable, but yeah they’re costly. I still don’t trust my own sense of money or grasp on investing. I put my faith in investment brokers (which could also be looked at as somewhat costly).

  4. Justin @ Root of Good says

    I think I’m pretty much set for life financially with a seven figure portfolio and the proven ability to live on the cheap. I retired early (at 33!) so I’m not that insecure financially.

    The financial insecurity comes into play in terms of spending freely. What keeps me from spending a lot more today is the fear of unknown tomorrows. Something really expensive could crop up in the next few decades, so I can’t frivolously spend money today since I know I might regret it tomorrow (or next year or next decade).

    Charities are unfortunately the biggest loser here. I can’t justify giving away money in large quantities since I don’t know whether I’ll need an extra $100,000 in a decade to take care of one of my children or some other family emergency. I expect my portfolio to keep growing faster than I spend it, so hopefully I will have way more than enough to leave a decent bequest to a few worthy causes (in addition to fabulously enriching my children with the main bequest).

    In the mean time, I’m approaching charitable giving like Warren Buffett did most of his life. Hold on to my own money and invest it prudently and that way I can give even more as I approach the end of life.

    • Colleen says

      When folks get asked, “What would you do with a million dollars?” I hear a lot of people answer, “I’d give half of it to charity.” I wonder how many of them would follow through with their intentions. It would probably depend on whether someone comes into the money suddenly or over time. The two situations would give a person two very different experiences of money. Seems a fair strategy to save your major donations for later in life or for your will when you are rest assured that you will not need the cash.

      • Justin @ Root of Good says

        I don’t think I could give away half of a windfall like that. I might keep $900k and stick $100,000 in a self directed charitable trust if I could save $50,000 in taxes due for making a charitable contribution. Otherwise, I’d probably keep the entire $1MM and then feel more free to give away a few thousand here and there without worrying too much about it.

  5. Kristy says

    I guess my financial insecurity would be trying to spend more and enjoy life more. We save plenty and sometimes I feel like we oversave (especially when I compare ourselves to others). Every year my husband and I vow to start spending more but there is nothing we really want to spend it on, so we save. We take vacations and do fun things with the kids, but I wonder if we shouldn’t do more.

    I also wanted to comment to say that we give our kids $1 per year per week. So my 8 year old gets $8 a week for an allowance. We have a piggy bank that is separated into 4 compartments: save, spend, donate and invest. Our daughter purchased one share of Disney last year. Our kids have to do chores, but their allowance is not tied to them. If they want to have more money, then they find other chores to do or have a yard sale with brownie/lemonade stand. Some people think that $8 a week is to high….but when you split it into the different compartments I don’t really think its all that much. Right now both kids know that we are going to Disney in September and they are saving money to spend while they are down there.

    • Colleen says

      Well it doesn’t make sense to spend more unless there’s actually stuff that you want or need. I really don’t know if $8/week is a lot for an 8 y.o. Considering you guys are headed for Disney, it sounds like they’ll really be able to use it! I pay my son $1/wk but if there’s something he really wants, I will subsidize his purchase. Just a different way of distribution.

      That is such a cool idea of teaching your kid about buying market shares at such a young age. It makes so much sense to grow into an understanding of stocks and bonds vs. trying to figure it out when you get out of college.

      • Kristy says

        Yeah, we don’t really subsidize any of their wants. If they decide they want a toy and it’s not near their birthday or Christmas, then they save their money and buy it themselves (or ask their grandparents!). The kids are saving like crazy for Disney.

  6. G says

    I pay my 8 year old a dollar a week for trash taken downstairs to the garage and another $1 to clean her bathroom weekly. She earns $8 a month. I am waiting for her to start bargaining her rates. That has not happened. When it does then I know she is starting to connect the dots. By the time she is 10, I am trying to start a small business venture for her to sell items amongst her friends so as she will understand entrepreneurship and maybe then get her to learn about stocks and invest. That would be cool. My personal fear at night is not being able to provide for them or myself when I am older.

    • Colleen says

      I never thought of the cliche, where the parent is plagued by their kids for a raise in allowances, as an important stepping stone in learning the life skill of negotiation. I’m sure the instinct to pester mom/dad for money will serve a young individual well when they are older and know they are entitled to ask for a raise in salary.

  7. Jason says

    I have a lot of insecurity here for sure. And, I think that as I get older, my insecurity goes up regardless of what happens financially. I also read stories of people retiring that are younger than me, and it still is disheartening, despite the fact that I don’t know what I’d do with myself if I retired. I guess I just want to have that option.

    When I was younger, I was making decent money in a high-paying career, so I thought that was enough for me and I really didn’t invest, I just saved. But, in my 30s, I saw the power of investing and it changed my perspective.

    I saw how little my life savings actually counted for and how easily it could be eaten up by even a small stint of unemployment. So I focused purely on searching for passive income and realized what an enormous amount I’d need to have invested to just get a decent salary out of it.

    Now, I’m just doing the quiet work of increasing and diversifying my PI, while still trying to enjoy the journey. There’s still a long way to go, but all of the choices have already been made and the only thing is to stay the course and execute the plan.

  8. bill says

    I pay my 14 year old $50.00 per month. She has to do the dishes every night and clean her room once a week. Out of that $50.00 she has to save 20%. She also makes money mowing yards, taking care of neighbors pets when there out of town, and other odd jobs she can find. She also must save 20% of that income. at 14 she has a little over 5k in the bank. Pay them early, teach them to save. It worked out well for me.

  9. krantcents says

    I probably have a lot of insecurities, but money is not one of them!I have been a lifelong saver which provides a lot of confidence. I chose accounting/finance/entrepreneur as a career which may indicate some of my skills. For the record, I was always interested in money and showed an early aptitude (7 years old). My early aptitude helped me achieve financial independence at 38 years old. I think success gives me confidence.

  10. Ricky says

    Speaking of financial insecurities, Sam & Colleen:

    I have full faith in American business and what we are capable of doing as a country. I share Warren Buffet’s positive outlook on the economy as a whole. I do not share the same outlook for our government, which is the dog we seem to be carrying around.

    How worried are you about America’s debt and the constantly looming debt ceiling and do you think there is a real risk of default? If so, do you think it would be traumatic enough to destroy the wealth of everyone who doesn’t move into safer currency?

  11. Lynn says

    I’ll let you know what we do for allowance currently (and polling other parents, it is a bit generous). When the oldest was 5 (youngest 3) we started allowance of $0.50/week per year of age. So, the 5 yr old got $2.50/week. They needed to put at least 50 cents of that into savings (now it’s up to $1/week minimum into savings). The rest divide between spend and donate. We use the Money Savvy Pig [http://www.msgen.com/] and currently don’t make use of the Invest portion of the pig — coming soon for us.

    A few times a year we’ll empty the ‘save’ portion and deposit it to their savings accounts. Around Nov/Dec, we have the kids decide on a charity for their Donate portion and we’ll match them. We’ll most likely stop the allowance by age 16 if they are working summers.

    It’s been interesting to see how the kids manage their money. I’ve a mad spender and a money hoarder.

  12. sweetandneversour says

    hi everyone from asia!

    just to share…

    i have always wanted to save alot but what means and ways i was also not sure! not until i landed my current job i had a strong urge to learn about insurances, savings, spendings and properties. after that i got in love! oh noes.. can u hear the wedding bells…

    its a blessing to have my fiance (we’re getting married in two months time) and we value things the same way as in paying cash and not loaning for marriage. in the same time we, as a couple try to understand and grab as much info on insurance and savings. i must say at this moment we have allocated every month 600SGD for 20 years for whole life insurance and endowment (savings). a huge commitment but we wish to start now and not later.

    what else? we have paid our marriage prep in cash but of course on a monthly basis.

    next? i’m aiming in a property whereby i have explain to my fiance i wish to own my first property before im 30. right now i am on the way (no join loan involve) to loan up to 320k to purchase 2 used double storey house on 0.4 acre land. my loan payment is 25years.

    kids in 2015 – yes, this has crossed our mind. after deducting everything we are left only 950SGD, can we live up to this for the decade. honestly, a solid foundation comes with proper planning and patience. i do believe this will test my patience and emotions but do let me know if you have further comments on this.

  13. wallstreet25 says

    Parents gave me weekly allowance. no specified chores cept get water when asked, clean crap, move stuff, throw trash.
    Philippines until 4th grade = $2 prolly $4 now in Philippines, or $15 US
    US until hs freshman = $15 prolly $25 now
    US HS until 1st job in HS = $25 prolly $35 now
    College = $0, pretty much lived off of grants and scholarships

    The now allowance is definitely respectable middle class. If they want more, tell them to find a job.

  14. john4512 says

    Years ago a reporter friend wrote a column about salaries and asked similar questions — such as “Why will people tell you the most intimate details of their sex lives but don’t want to tell you how much money they make?” He decided it’s because there are only two possible responses when you hear how much someone makes. It’s either “He makes that much?” or “Is that all he makes?” As a reporter on a competing newspaper I happily read and enjoyed the column as I kept telling myself “If he’s got any credibility, he’s got to tell us how much he’s making.”

    He didn’t disappoint. He revealed his salary in the closing sentence. And my first reaction was: “Is that all he makes?”

    • Financial Samurai says

      Brilliant! And the reason why I think $75,000 is NOT the income for ideal happiness is because that’s how much researchers make. They don’t know what happiness is like at $200K, $500K, $1 million because they’ve never earned it.

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