Parents are the best example our children will have of how to make money, manage it wisely and use it to fulfill God’s purposes. They watch us very closely and more often will “do as we do” rather than “do as we say.”
We should openly discuss the family finances in their presence. We must acknowledge God’s ownership of everything we have, from salary to possessions to talents and gifts. Our children should see us tithing and giving as well as praying for God’s provision for the family’s needs. And we must not forget to praise God when prayers are answered and needs are provided.
A part of being in a family is having responsibilities to keep the family household going. Children should be expected to do certain jobs just because they live in the house. Cleaning their rooms, picking up their toys and clothes and helping their parents are things they should do without expecting any compensation.
However, for children to learn how to handle money God’s way, they must receive an income. Allowances should be given based on the child’s age and the family budget. It should be large enough that the children anticipate receiving it, but not so large that they are tempted to spend unwisely. Allowances should not be tied to household chores or to behavior, either good or bad.
Ages 8 and under
Use a three-part plan with categories for giving (at least 10 percent), saving (50 percent) and spending (40 percent).
Children should give the money in their giving category to the church. The spending category should be for items that the parents don’t need to buy, such as small toys, baseball cards, candy, etc. The saving category should be for a specific goal that is fairly quickly attainable so that the child doesn’t lose interest. Examples: Attending a baseball game or amusement park, extra spending money for family vacation or a special gift.
Parents should guide their children in making wise spending choices, but they should also teach their children the consequences of poor choices. Once the money from the spending category is gone, they are not allowed to take money from the giving or saving categories to spend.
(However, the reverse – taking from spending for a special gift to someone in need – is to be commended. We want our children to be generous stewards.)
Children should start keeping track of their income and expenses in a small notebook.
Their categories could now include: Giving (at least 10 percent), short-term savings (25 percent), long-term savings (25 percent) and spending (40 percent).
Short-term savings should take three to six weeks to accumulate. Long-term savings should take three to six months to accumulate. Parents might want to start a savings account for the child so that he can begin earning interest.
Children at this age can start taking on extra jobs for extra pay. Offer to let them mow the lawn, clean out the garage, wash the car or wash the windows in the house to earn extra income.
Agree on the amount to be paid and expectations for the job beforehand. Pay only for jobs completed with quality work.
Teens should keep a written record of their income and outflow. Older teens can start a checking account and be responsible for keeping up with their checkbook registry. They can also use a savings account to earn interest on their savings.
Their categories could now include: Giving (at least 10 percent), taxes (5 percent), short-term savings (25 percent), long-term savings (25 percent), expenses (10 percent) and spending (25 percent).
The tax category is to prepare them to pay taxes. They may not have any to pay right now. The expenses category is to prepare them to pay utilities and other monthly bills.
They can help pay for household expenses, such as TV, phone or Internet. When the bill comes in, their 10 percent goes towards paying the bill.
Allow teens more freedom in making their own financial decisions and to face the consequences of poor choices. Do not bail them out.
Once a teen begins working outside of the home, allowances should stop.
If the parents decide to buy or help pay for a car for the teen, he or she should still be responsible for paying a portion of insurance and maintenance, and all tickets or parking violations.
By laying a biblical foundation for your children from the beginning, they will learn to handle their money God’s way. They will learn to be faithful and generous stewards of the resources they have, to make wise choices and to trust in God as their ultimate Provider.
Chuck Bentley is CEO of Crown Financial Ministries and executive producer of the new film learning experience, “God Provides,” scheduled for release in September 2009. Cofounded by Howard Dayton and the late Larry Burkett, Crown Financial Ministries (Crown.org) is an interdenominational Life dedicated to equipping people globally with biblically-based financial stewardship tools and resources through radio, film, seminars, small groups and individual coaching.