I have a confession: when I was a kid I was kind of obsessed with money. I didn’t care about spending money, I didn’t care about earning money, what I really loved was keeping track of money.

When I was only in first grade or so, I had an index card that I would keep in my purse that was divided into two columns: dollars and cents. I would tally up every dollar I got from my grandma on birthdays, every penny I found on the ground. Once I had 100 tally marks in the “cents” column, I would erase it all and add a tally to the dollar column. Until I was 20 or so I planned on being an accountant, I guess maybe I missed my calling.

The 10-20-30-40 Method

By the time I was in high school, I had graduated from an index card to a multi-sheet Excel spreadsheet complete with formulas and calculations. Now, every penny I earned was divided into categories with scaling percentages.

I wanted an easy way to split up my money, and I always loved the fact that 1+2+3+4=10, so I started with that. (Arthur loves this too, but he takes it even further. All day long he spouts off simple addition facts, and his favorite is 1+2+3+4+5=15. He definitely inherited my math brain.)

The 10-20-30-40 method is an easy remember and easy to follow way to divide your money between spending, saving, and generously giving to others:

  • 10% DONATE: I give 10% as tithes to my church, which then uses the money for humanitarian efforts, emergency relief, welfare programs, higher education, and so much more. You can of course help your kids research other charity organizations and choose one that is the best fit.
  • 20% GIFT: Birthdays, Christmases, Teacher Appreciation, any other occasions where your child might want to give someone a gift, It means so much more when they use their own money to buy it (you can of course help out if needed.)
  • 30% BUY: This is all they get for ANY purchases for themselves. This includes candy and toys as well as new clothes or shoes if they aren’t a necessity. It also includes big purchases that they might want to save up for. Even if it takes months to save up for, big purchases come out of spending, NOT savings. They need to learn to balance short-term and long-term spending.
  • 40% SAVE: Again, this does NOT mean saving up for some big purchase. This is untouchable. As it starts to fill up, this money should be put into a high-yield savings account or even put towards simple low-risk investing. This is for college, weddings, missions, maybe even the down-payment of a first home. They DO NOT TOUCH IT until they are 18.

Why give so much away? Why put so much in savings?

Honestly, once you are an independent adult, you have no say over where a HUGE chunk of your money goes. Mortgage and rent, taxes, bills for phone, internet, water/sewer/garbage, city fees, gas and electric, and the list goes on. Then there are the slightly-more-flexible-but-still-not-exactly-fun-and-exciting things like groceries, toilet paper, and socks.

I want my kids to get used to spending only a tiny portion of their money, because otherwise that transition from living in mom and dad’s house to living on their own and paying for ALL of their expenses is ROUGH. Even living in a dorm room gives a false sense of security, because all utilities and often even food are included in one small fee.


My parents frequently taught me to “spend less than you earn,” but I wasn’t really paying enough attention, and I interpreted it as “spend less than you have.” I always knew consumer debt was a terrible idea, and I naturally saved (okay, hoarded) pretty much all of my money for most of my youth.

But then when I was 20 or so I started actually being social for the first time in my life and I quickly blew through most of my savings. Then I got married and spent pretty much all that was left on our honeymoon.

I want my kids to start off their adult life financially independent—not just with enough money, but with the knowledge and skills to use it wisely. That is why I am going to have them save it up themselves and grow up thinking certain funds are untouchable.


On the other hand, I don’t want them to be complete misers or develop a mentality that they can’t ever part with their money. And I believe the best way to strike this balance is through teaching almost ridiculous generosity. HALF of the money that they don’t save will go to others, rather than themselves.

Not only does this teach them to be selfless, but it will also actually contribute to MORE financial security in the future.

Many entrepreneurs and some of the richest people in the world, including Bill Gates and John D. Rockefeller, claim that giving away their money directly contributes to accumulating more. This sounds counterintuitive, but it’s actually true.

If you have the time, I highly highly recommend this speech from economist Arthur C. Brooks about his study and discovery of why giving is so important. But if not, I’ll sum it up for you: giving makes you HAPPY and it has long been proven that happy people are more successful and make more money.

What You’ll Need

  • Four mini cereal boxes
  • Scotch tape
  • Clear packaging tape
  • Scissors
  • Exacto knife
  • A printer, 2 sheets of paper, and the FREE 10-20-30-40 bank template
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How to Make Your Bank

  1. Download and print out the FREE 10-20-30-40 bank template. Cut the templates on the dotted lines.
  1. Empty four of the mini cereal boxes. Be careful when opening the boxes not to rip apart the tabs too much, because you’ll need to close it back up later.
  1. Starting at one of the side tabs, cut about an inch and a half alongside the box. Fold back the tab you’ve created. This will be the opening to be able to get the money out of the bank. Repeat on the other three boxes.
  1. Keeping the side tab open, tape the tops of the boxes closed.
  1. Tape the four boxes together to create your bank. Make sure the opening tabs are all lined up on one side.
  1. Starting with the back cover (the one with the arrows and “open here”) fold in all of the tabs.
  1. Then pre-fold all of the flaps.
  1. Line up the cover with the back of your bank, make sure you are putting it on the side with the opening tabs, and tape it in place. I found it easiest to secure it with small pieces of regular tape first, then go back with packaging tape to really seal all of the edges.
  1. Cut the cover between each of the opening tabs so that they can open individually.
  1. Tape around the cut edges of each opening tab to keep them strong.
  1. For the front cover, again fold in all of the tabs, then all of the flaps.
  1. Align the cover on the bank and tape it in place. Seal all of the edges. If you want your bank to be even more sturdy, you can cover the entire thing with packaging tape.
  1. Use an Exacto knife to cut out the slots for money to go into.
  1. Start teaching your kids how to handle their money well!

How to Use the 10-20-30-40 Bank

It’s simple, really. Put 10% of earnings into “Donate,” 20% into “Gift,” 30% into “Buy,” and 40% into “Save.” That means for every dollar your kids earn, you divide it into 10¢, 20¢, 30¢, 40¢. For every $10 it would be $1, $2, $3, $4. See how nice that is? I just love math sometimes! But I’m rambling and getting off topic…

All you need to get your kids started on the path to financial freedom is a couple of rolls of dimes, and some one-dollar bills.

Young Kids

This bank can be used as soon as kids start recognizing what money is and start getting some for themselves. My boys are only three and four and even though they didn’t fully understand, they were excited and able to use the bank. They had both gotten birthday money from grandparents, and we decided it was the perfect time to start.

First, I explained that a dollar is the same as ten dimes, and so I was going to trade their dollars for Mommy and Daddy’s dimes. Again, they didn’t completely understand, but they were okay with it after a bit of reassurance.

I told them about each category of the bank. They were the most excited about the “Donate” category when I explained all of the things their money could help do and all of the people that it could help. Kids naturally have generous hearts, so these habits are easy to develop when they are young.

I then gave them their dimes, ten at a time, and helped them put them in the correct parts of the bank. For Walter, I set piles of 1, 2, 3, and 4 dimes right next to each slot and all he had to do was put them in. I had Arthur help count out the right number for each category.

One note: they may get excited and want to shake the bank to hear all of their money rattle around inside. Don’t let them. The coins will fall out and you’ll have to start over again. We may have learned this from experience.

The next day, we opened up their “Buy” banks, counted the dimes inside, and they traded back with me for dollar bills to take to the store and buy their very own toys with their very own money.

Thrift stores are great because you can get more bang for your buck, plus if you go to one run by any kind of non-profit there’s not tax to complicate things.

They each picked out some things they liked, then we used calculators to add up the prices and they had to put some things back to stay within their budget. There are just so many skills that they learned from this one activity!

As the other categories fill up, we will follow a similar process, exchanging the coins for bills and helping them make a donation, buy gifts for others, or deposit it at the bank.

Over time, as they get more money from birthdays and other things, we will continue to trade for dimes and have them split it up into the categories. If they just get a few coins here and there, we let them decide where to put them, and kids will usually surprise you with choosing more than just “Buy.”

Older Kids

With older kids you can follow a similar process, but exchanging larger bills for one-dollar bills, depending on how much they have to put in the bank. If they just get a few dollars at a time, you could also designate a safe place to keep their money until they get up to ten, depending on what works best for you and for them.

As they get older you can let them have more responsibility over appropriately dividing and using the money. Teach them the what, why, and how, and then trust them to follow through.


Even teenagers can follow this same method of dividing their money, and can even use this bank. However, as they start earning more and more money and get jobs and bank accounts, it gets a little more complicated.

The 10-20-30-40 method is still an excellent way to manage money, a cereal box bank just may not be the best way to implement it.

But don’t worry! I’ve got you covered for that too! Instead of the bank template, you can download my simple budget worksheet for your teens to use to keep track of how much they have in each category. The first page has instructions on how to use it.

Setting your kids up for success and happiness

There is a lot of talk about how it’s impossible for millennials to be as financially secure as our parents’ generation because costs are higher and wages are lower and the world is generally against us.

While there are some true points in how the economy has shifted, that doesn’t mean we can’t still practice sound financial principles and have what we need. Brian and I were able to purchase a house, build up a good amount of savings, start investing, and have three (soon to be four) kids, living on just one income, and not an especially high one.

As credit and debt become easier and easier to obtain, and more and more common, it is SO EASYto slip into bad habits. Teaching your kids better money management skills from a young age will set them up to have financial freedom throughout their entire lives.

And if they don’t have the worry of money hanging over their heads, they’ll be free to do more of what they love and more of what matters!

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