“Start children off on the way they should go, and even when they are old they will not turn from it.” (Proverbs 22:6, NLT)
Does your child think money grows on trees—or on ATMs? From an early age, children are curious about money: how it’s made, how it’s spent, where it comes from and where it goes. Because of this natural curiosity, it’s never too early to talk about money with your kids; as soon as they’re old enough to ask questions about it, you should answer their questions truthfully and in an age-appropriate manner.
Today’s world does not encourage responsible stewardship—media and the marketplace teach kids that instant gratification is not just desirable, but necessary. How can we instill a more responsible attitude towards money in our children? The key is to be honest with them, and to give them some power to learn how to handle money themselves.
Giving kids an allowance is a vital first step. Don’t link the allowance to chores; chores are an important part of learning responsibility and should remain unpaid. Instead, make sure your kids know that this money is to be divided into “give,” “save,” and “spend” categories. Invest in some large, clear plastic bins or mason jars and label them accordingly so the children can see their money adding up. Make sure your kids divide their allowance (and any birthday cash they might get) evenly between all three bins; otherwise, the “spend” bin will be overflowing before you know it.
Depending on your children’s ages and your family’s situation, you may choose to let your child use their “spend” money on toys, clothes, lunches out with friends, or luxury items like fancy shoes and video games. Resist the urge to bail them out even if they spend unwisely; a pricey pair of jeans that gets torn on the first wear or a video game they get bored with after a few weeks can be turned into a valuable lesson about stewardship.
Use the “give” bin to open a discussion with your children about supporting your church, missions, and charities, and let them decide whom they would like to support with their money. This is a powerful lesson in the importance of sharing what we have with others. Through the letters your children will receive from the causes they support, they will learn the joy that can only come from giving.
Once there’s enough in the “save” bin to do so, let your children open a credit union savings account; this will give them a chance to see their money grow. Talk to them about the kinds of things they can save up for over time. Older children may benefit from opening and managing their own checking account, and from building a relationship with the credit union that can help them to finance later needs like a car, student loans, and even a home.
Leading by example is a powerful teaching tool. Be honest with your children about your income and financial situation. If you have debt you are paying down, discuss with them the solutions you are using to do so in a calm and reassuring manner. If you tithe and/or give to charity, talk to your kids about why giving is important to your family instead of keeping the money or spending it on luxury items.
Talking to your kids about your finances will help alleviate any anxiety they may feel about money and can help them form stronger relationships later. Many parents believe they are protecting children by keeping financial information from them. However, this too often results in young adults who are unsure how to handle money and who give money too much power in their lives. By keeping kids in the loop about your family’s finances and encouraging them to make their own decisions about giving, saving, and spending, you’ll be helping to set them on the path to a healthy financial future.
This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.
This article was updated 11/17/16 for accuracy of links.
