Smart About Money: Build A Pattern For Life

Smart About Money: Build A Pattern For Life

Building a “smart money” pattern for our kids starts when they are young. According to a Cambridge University study, most children’s money habits are formed by age 7. So, from the earliest time that they have money of their own, whether from a weekly allowance, doing chores, baby-sitting, or birthday money – whatever the source, they need to practice dividing it into 4 financial uses.

Using the GISS Method

One of the easiest ways to do this is to get them involved and have them build their own bank. Their bank needs 4 compartments. Label them “G” for Give, “I” for Invest, “S” for Save, and another “S” for Spend. From the beginning, when they get money, have them divide it into the 4 compartments:

  • 10% to Give
  • 15% to Invest
  • 25% to Save
  • 50% to Spend

This helps you lay the groundwork, so in the future when they have that first paycheck, they will have learned how to spend only half of it. This practice, as a child, will help them grow into financially responsible adults.

Saving and dividing up the income is one of the most important financial skills in life. It helps kids learn to delay gratification and they also build self-control. When you give them a dollar, you don’t want your child to think they can go to the store and spend it all. That is a habit that will not serve them well as adults.

Again, the GISS method one of those financial skills that you need to repeat and you need to be consistent in the way you apply it. If you’ve decided to give an allowance, when the time comes at the end of the week or month to give them their allowance – you have to give them their allowance. You can’t just let the day pass. You can’t give them a whole sum of money at the end of the year. And you need to give it to them in small bills and change, so they can easily divide it into 10%, 15%, 25%, and so on. Every time you give them their allowance or help them divide their money into the compartments, you’re building good saving skills that will benefit your child in the future.

See how my son used the GISS method to save up for an Xbox:

Helpful Link:

More on the GISS Method from Zela Wela Kids:


Any opinions are those of Traci Richmond and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.