What if every child grew up and knew how to properly manage their money? It would be nice if that was the case, but the sad thing is most children don’t have this skill because their parent’s parents never taught them. Without action or intervention, the trend continues generation after generation. When does the trend stop? Just like when any other trend is stopped, someone or something decides to change the game, thus creating a new trend.

I think it would be wonderful if every parent in the world had in their possession a piggy bank that broke down money into four categories: Spending, Donating, Investing and Saving. I don’t think I need to go into detail about spending because that’s what everyone knows how to do. But let’s take a closer look at the other three components of this piggy bank.

Donating is a remarkable and fulfilling thing to do because it shows that you care about something other than yourself. That, in itself, is a great quality for kids to carry with them throughout life.

Investing helps a child learn about stocks, bonds, mutual funds – and most importantly – about developing a long-time financial strategy.

Saving, a concept that even adults struggle with, teaches a child to be disciplined about having money for rainy days, emergencies and shorter-term purchases like a new video game. The rule of thumb is to have an emergency fund with enough money to cover basic living expenses for about 3-6 months. Since no one has a crystal ball to predict the future, a healthy savings account can help people prepare for the unexpected.

At Northwestern Mutual, many financial representatives provide four-slot piggy banks – affectionately named Penny the Pig – to clients who have kids. As another option, some parents are providing kids with four clear containers – one for each money management concept.

No matter what container you choose, the important thing is for parents to begin a long-term conversation about money with kids in a comfortable and practical way.

I wish I would have had one of these banks when I was a kid. However, I have to give a special thanks to my parents for explaining these concepts, because they did it without the help of a magical pig. Being born and raised in the south, I was always told that you can eat everything on a pig except the oink, but who would have thought that a pig could help teach kids about money and so much more. I tip my cap to the almighty pig.



Jasper Smith is a Financial Representative of The Northwestern Mutual Life Insurance Company, Milwaukee, WI (Northwestern Mutual). Working out of the Walnut Creek, CA office, Jasper provides, for individuals and small business owners, expert guidance and innovative insurance and investment solutions for a variety of financial needs and goals. For more information on all the services Jasper provides log on to www.nmfn.com/jaspersmith. Securities offered through Northwestern Mutual Investment Services, LLC a subsidiary of Northwestern Mutual.