Take a moment to picture your children going off to college and managing a semester’s worth of money on their own. Would they run up the debt and bounce checks or would they spend wisely with some left over? Maybe you are not sure how they would handle it, and now is the time to find out by teaching your children sound financial decisions so that they will become money-smart adults. Proverbs 22:6 tells us to “train up a child in the way he should go, even when he is old he will not depart from it.”
Unfortunately, most parents today offer no financial training for their children other than to allow them to watch as the family consistently overspends without a family budget. To make matters worse, once the children leave home and embark into the “real world,” they certainly don’t get the advice they need about the bondage of debt, the wisdom of saving and the joy of giving. As we all know, you can go through high school, college and even earn a PHD, and no one will ever teach you how to balance a checkbook, use a credit card or communicate with your spouse about money. The home is the perfect environment to begin teaching the timeless financial principles found in God’s word. Consider a few tips to leaving a legacy of financial faithfulness:
The best way to begin training your children in sound financial principles is to teach by example. It’s impossible to establish financial discipline in your children if you are not disciplined. As parents, it’s important to demonstrate that you are willing to set aside indulgences and personal wants to provide for the needs of the family and others. Parents should let their children see them pray for God’s provision concerning material needs and let them know that borrowing is not God’s best for the family.
Unfortunately, most children grow up with no concept of the actual expenses that a family incurs. Recently, I had a Dad tell me that he cashed his entire paycheck and placed the cash in the middle of the dining room table. He gathered the whole family around and proceeded to allocate cash for every fixed expense that the family had that month. The kids were amazed at how little was left over for the discretionary expenses that remained. They began to understand the budgeting process and actually became allies in cutting back spending. When it came time for the weekend, they had a better understanding about why Mom and Dad wanted to stay in for game night instead of eating out and seeing a movie.
Another way for children to begin understanding the value of money is for them to have an income or an allowance. An allowance is a great hands-on teaching tool to learn valuable financial principles, even at a young age. Most parents that I have talked to agree that the allowance should not be tied to a work-for-pay project. Instead it should be given unconditionally with no strings attached. However, guidelines need to be established that determine how much the child will receive and how they are allowed to spend it. The allowance should be large enough that children look forward to receiving it, but not so large that it covers all of their needs and wants.
And even at a young age, it is so important to begin to instill the in the children the principle of tithing and giving back to God the first fruits of their income. It is a wonderful experience for the children as they learn to bring their tithes to the storehouse along side their parents and give cheerfully back to God out of obedience. In his book Teaching Kids to Manage God’s Gifts, Larry Burkett suggests setting up three piggy banks for a child to use to teach them the difference between tithes, savings and spending money.
Spending money is designated for small items that they want to purchase themselves. These would include small toys, games, gum and so on. However, they need to understand that once those funds are gone they are not able to take from the giving or savings bank to buy things they want. In fact, your children might actually become very cheap when they begin paying for some of their own personal expenses. The daily drive-thru after school might not sound as appealing as it once did if they are paying for it.
Money placed in the savings bank is for the purpose of attaining a specific goal. Encouraging saving as a child will actually discourage debt down the road. Children who learn how to save for the things they want will as adults be more inclined to save for wants rather than going into debt to get them. In addition, many parents actually pay interest on their children’s savings. This teaches the concept of allowing your money to work for you, and it encourages them to save rather than spend. As they get older you can encourage them to actually break up the savings into long-term and short-term savings.
Financial training takes time and consistency, but remember that you are not training children; you are training future adults. Taking the time to provide solid, biblical financial instruction during childhood can avoid a lifetime of costly financial mistakes. Take that to heart as you teach your children to keep money and possessions in an eternal perspective.
Rob West is the Training and Communications Director for Kingdom Advisors, a non-profit Life that exists to equip and disciple Christian financial advisors to integrate their faith and profession. Please send questions and comments to [email protected]
The information in this article is for information purposes only and does not constitute advice. You should not rely on any information in this article to make (or refrain from making) any decision or take (or refrain from taking) any action.