My husband and I have determined that we want to teach our children about finances God’s way from a young age. Like most people, we have made some mistakes with money. We want to keep our children from making the same mistakes if possible. With children that are still young, we are learning as we go along. Here are a few things we have done so far:
Our children have received money as gifts from grandparents, family and friends since they were babies. We save the money they are given in their own little “account” (usually a resealable bag in the filing cabinet). When our children begin learning about money in school, generally around age 5, we begin teaching them about managing money and giving them opportunities to earn it.
Teach them the three purposes for money.
As Dave Ramsey says, there are only three things one can do with money: spend it, save it or give it away. We try to show them the best way to do all three.
Once the children are old enough to understand money a little bit more, we allow them to make this decision. After all, it is their money! We teach them the principles and let them work it out for themselves, within reason.
We teach our children that all our money belongs to God, and we willingly give Him at least the first 10% of any money earned. If a child receives a money gift, we leave it up to him as to whether he will tithe it. Obviously, we would not expect him to give away a chunk of a Christmas toy or rip 10% of the pages from a gifted book to give away.
However, if they earn the money themselves either from us or another means, we show them that the Bible teaches tithing. We do not make this a mandatory thing, but we allow each child to work out his own salvation. Consequently, they usually give more than the 10%. We allow them to tithe directly to the junior church or their Sunday School class so they can better see how the system works practically.
We also create opportunities to allow them to give beyond the tithe they owe to God. When a missionary recently came to our church, he took pledges for churches his organization was building in South America. The pledges were in a sealed envelope, so we didn’t know how much we would pledge until we chose one. It turned out to be a decent amount for 4 unemployed children and 2 parents trying to provide for them!
Daddy told them that he would match whatever they gave so they could meet their pledge. By the time they all contributed, gathered the change from around the house and Mommy put in a few (very few!) dollars, they funded the whole amount plus an extra $7 for a Christmas box for needy children. Daddy was a little surprised when he had to double our original pledge amount!
Next to giving, saving is the most important thing we can do with our money. When our children save up $50 of their own money, we take them to the bank and open a savings account for them in their name. They have to maintain at least a $25 balance, and they can contribute as much as they like.
Our daughter has bought two of her own American Girl dolls this way and is currently saving for her own laptop computer. We have also opened an account for our second child, and the two little ones are very close to having their own accounts as well.
This isn’t something we have to pressure our children to do! They all see things they want. They must have the cash in hand to make purchases or clearly know the balance in their savings account (above $25) so we can make the purchase. We transfer the funds to our own account later and update them on the balance. Yes, we actually do it. If you think that is mean, try living on handouts alone for awhile and see what a privilege you have to make and spend your own money. 🙂
Teach them the one way to get money.
The only real way to get money is to work hard and earn it. If you spend your life waiting on an inheritance, a cushy job or a big win, you will most likely fail at money.
We have tried different systems. Requiring them to do certain jobs and paying them based on the difficulty of the job is a great idea, but I honestly fail at keeping myself accountable on this.
Currently, we have a job fund. When my husband and I get out our blow money each week, we fund the job fund out of that as well. The children can do as little or as much work as they want to do and earn as much as the envelope contains. The jobs we offer them usually earn $1 each to keep accounting simple.
We encourage them early on to make their own money as well. My daughter especially loves to do this. She started collecting cans and recycling them. We made her do all the work of rinsing them and bagging them. She went along to the recycling place and picked up her earnings minus a dime or so to Dad for transportation. Yes, we are that mean. But again, try convincing the bus driver someday that you shouldn’t have to give up your income to him for taking you to work. And the gas pump doesn’t work unless you pay something.
When we stopped drinking pop, the can supply dwindled. So, she turned to her creativity to make money. After a few failed attempts at creating and marketing a quality product, she settled on this:
Her grandmother was kind enough to teach her how to make these scarves. Other than a few posts Daddy made on a Facebook page, the only marketing she did was wearing them. She’s gotten several orders from people who saw them and wanted her to make them one.
This was an excellent opportunity to teach her how to purchase quality materials at the lowest price possible and to charge a fair price while making a small profit. Other than some gifts of yarn from grandparents, she has paid for all materials out of her own money and profits.
To show that I’m not always mean, I am giving her free advertising here. If you are interested in a scarf, feel free to e-mail me for more information: mail (at) jenniferlself (dot) com
However, I am only sharing because it is truly a quality product and I occasionally wear them myself. Which is why I did not offer to advertise for a few of her other projects. 🙂
Let them feel the consequences of wrong ways to get money.
We teach our children that debt is to be avoided as much as possible. Debt is borrowing from the future to pay for the past. It is often a means of immediate gratification and makes us feel as though we can spend without consequence. Not true. Been there, done that. To again quote Dave Ramsey, we are trying to change our family tree.
Once one of our children was shopping with Daddy and saw something he wanted. He told Daddy he had the amount needed in his savings account. When we checked his account later, he was short. Not a big deal, right? But we thought it was an excellent opportunity to teach him about debt before the credit card company approached him on his college campus.
We were on an allowance system then, so we passed out everyone’s allowance but his. When he wondered where his was, we told him that he had already spent his and reminded him that he had borrowed from Daddy without the money in hand. We showed him that when we borrow, tomorrow’s income is eaten up with what we had to have before we had the money to pay for it. He has been careful ever since to either take the cash to the store with him or check his account balance before he goes.
Show them that life isn’t all about money.
While money is important to live and to give away, we do not want our children to be focused on money. Except for a few jobs we designate for the job fund, we expect them to contribute to the family without compensation. It is part of belonging and caring for what we have together. They help with dishes, laundry and cleaning up because they helped make those messes. We also try to stress to sometimes give of their time or other resources simply out of love, not in exchange for reward.
How do you teach your children about money?