Raising children is a tremendous responsibility and a blessing. One very important aspect of that is teaching them how to manage money…because it’s one area of life they’ll use every day for the rest of their lives. Train up a child in the way they should go and when they are old…they won’t have to borrow money from you. Obviously…a bit of a paraphrase there but truthful nonetheless.
At what age should you begin teaching your kids about money and God’s view of it?
We all begin teaching our kids about money through modeling whether we realize it or not. That can be a good thing or a bad thing. It's a good idea to start incorporating a biblical view of money at the earliest ages in the way we talked about money. Talking about the idea that everything belongs to God and we need to be good managers or caretakers can happen very young. Then, the idea that there are limited resources, and so we need to plan or a budget to accomplish the things that matter most is critical. A good approach to exposing them to finances is to let the kids to get involved in managing a specific category of our spending plan for the month.
What practical suggestions are there regarding teaching children finances?
Make what you teach age appropriate. Make it fun, make it visual and make sure that both spouses are in agreement.
For very young children, start with a bank or jars that allow them to see money separated for saving, giving and spending.
Have them do tiny chores around the house. Agree which ones are just "part of living in a family" and which ones you'll pay them for. Pay them only for a job well done just like their boss will do later in their lives— but don't demand perfection.
Picking up toys and putting clothes in the laundry basket, making the bed, and feeding the dog might fall into that first category of "expected" chores. Then consider paying children for things like helping to clean out the garage or wash the car.
You’re trying to teach them work is a good thing and expected and about the concept of work and reward. Pay quickly so they can see and feel that reward. Tie any allowance to small jobs or chores not just a way to give them spending money for living in your house.
What about as they get older?
For children ages 6-12, try implementing a chore chart broken down by daily responsibilities and "cleaning day" responsibilities. This should be something they understand and agree to and something they are responsible for checking and checking off themselves. Here's the chores mentioned earlier.
- Making their own beds
- Folding and putting away laundry
- Feeding pets
- Setting and clearing the table
- Washing windows
- Raking leaves and light yard work
Remember the job should be done on time to a reasonable expectation for their age without you reminding them. Do not nag. Be consistent and they’ll learn the system soon enough. Later, let them in on some family choices and decisions when it’s age appropriate.
What about spending?
Let them use their spending money any way they want as long as it's safe and meets your families values. It's not really a reward if you dictate how they spend the money they've earned. If they make a bad choice — say buying a cheap toy that breaks — that's a great lesson to be more careful with the money they've toiled to earn. Or, if they pay for something that they don't use, point out the fact that things can have appeal that wears off quickly.
Finally, what about giving?
It's never too early to teach kids about tithing and giving. You want to encourage them to be generous and setting aside their tithe for the church is a great way to start. Let them put their tithe in the collection basket. I love getting them involved in their giving to others where they can see the effects… sponsoring a child, supporting a food bank and then going there to make sandwiches… you want them to begin to appreciate the joy of giving. But one of the best practical ways to teach your kids about money is to model biblical financial principles. Let them see how you and your spouse manage money!
Next, Rob and Steve tackle listener questions at 800-525-7000 and via email to Questions@MoneyWiseLive.org on these topics:
- If your current advisor seems to be pushing you to do things, how do you know who to trust and who to believe when it comes to financial advisors?
- If you're recently divorced, living with your parents again, working full time but in debt for a student loan and a car loan and have some things going in to collection, is there any hope for people in this position?
- What are the pros and cons of giving an inheritance while still alive versus waiting until you pass away and how does the need for long term care affect it?
- If you're a 19 year old college student with a job that pays minimum wage and no debt, what's the best way to save for the future?
- If you currently have a credit care with a large balance and a high interest rate, would it be wise to pay off the credit card with a new loan at a lower rate?
- If your husband just passed away and you find yourself in a brand new financial situation with a settlement of $200,000, what are some options for this money given the fact that you might need some long term care insurance?
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