Less is More - money management for kids

Teaching wise money management to our kids.  We all want to do that.  So how do we explain so many UNwise folks when it comes to money?  Personal bankruptcies are unimaginably high (1 out of every 175 Americans will file for bankruptcy at some point in their lives).  Personal savings rate is 1/3 of what it was 30 years ago (4% of personal income as opposed to 12%).  Even though personal disposable has increased. 

How can we help our kids avoid financial stress, or quite possibly disaster?  I am sure we can't solve the nation's problem but maybe we can make a difference in the future of our own children.  Here are some suggestions:

1.  Most importantly, model it.  Luke 6:40 tells us that "A student is note above his teacher, but, a student, when fully trained, will be like his teacher. " Personally, I think that is the scariest verse in all of Scripture.  But maybe I need to see it as one of the most hopeful.  And as an opportunity.  I know in my own life, I saw my parents live out financial principles such as faithful giving, no debt, and living below your means.  It shaped me permanently.  I realize all of you may not have had the same blessing.  However, see this as your opportunity to "change your family tree", as Dave Ramsey likes to say.  Don't see yourself as handicapped because you didn't see the right money behavior modeled before you!  Be mature enough to take charge and change things for your kids.  Let them see you tithe regularly, pay your taxes honestly, and save consistently.  And let them NOT see you whine because you "can't afford " something.  Instead, let them see you make a choice to delay temporary gratification in view of greater, more permanent good.

2.  The 3 jars.  We began when our children were about 2 or 3 with "the 3 jars."  There are some cuter options available now but we used 3 pickle jars.  Labeled them "Give"  "Save"  "Spend"  and provided our children a weekly allowance.  I will let you in on the beginning amount but promise not to gush over our benevolent generosity.  Each kid started out with $.10.  Yep, 10 pennies.  Paul would sit down on the floor with them and have them stretch their little hands out in front of them.  Then he would lay one penny above each finger.  (Since they were counting, I considered this a Math lesson and counted it as school.  JK!!)  We didn't prescribe the amount but we told them they had to put something  in each jar every week.  The giving was for church or a para-church organization or some mission beyond themselves.  The spending was used any way they wanted to.  And, here's the mean part - the savings jar was for a car.  Talk about delayed gratification!!!  We filled up that savings jar and eventually opened up a savings account for them.  As they got older, they added to those jars on their own and learned how banks worked.

3.  Around age 15, we did a few other things.  Opened a checking account for them and taught them to balance their checkbooks.  Turned over a portion of the monthly clothing budget to them and made them responsible for their own clothes purchases.  Had them sit down with our financial advisor and opened up an investment account for them.  An account which they funded.

4.  Our goal is gradually to move them to be financially independent.  At least from us!  If they get a speeding ticket, they pay it.  If they want to go out to eat with their friends, they pay for it.  Not that we don't ever make an exception or slip them a $20 "just because" but you get the idea.  We want them to have money experiences and responsbility while the risk is low. Before they are out on their own without a clue about taxes and mortgages and credit cards.  (which we DON'T get them, btw)

5.  When it's time to buy their first car, we help them search and research.  And then we match what they have saved.  (We may have to put a cap on the match amount for one particular kid...)

6.  We are open with them about using coupons, reducing costs, saving for  gifts and vacation, and so forth. And we talk about their own buying decisions.  Although we provide input and suggestions, we do NOT dictate how they can spend their money.  Sometimes they blow it.  And, though it's painful to watch, we feel those are necessary lessons. Please do not report us to DFACS for cruelty to children.

7.  Take a small amount of money (we have done $5 or $10) for each family member - parents included.  Distribute the cash and instruct each person to invest the money in the life of another person.  Directly, not as a contribution to a ministry.  Then report back what you did.  (Hand it out on Thanksgiving and set Christmas Eve as the deadline for completion).  We have had so much fun with ths!!  The younger ones will need a little help to implement, of course, but we have all enjoyed this with much enthusiasm.  You'll be amazed and encouraged at the creativity you see employed.  And one day, perhaps the fruit of the money invested will be revealed in Eternity.  That's the point!

Here's a great resource for you on this subject - Raising Money-Smart Kids by Ron and Judy Blue

Oh, and BTW - we did increase their allowances as they got older.  To a quarter!  lol!!  JK!!