Kids and Money

Money.  If you ask 1000 people what the Bible has to say about money, I'll bet that 998 of them will say "Money is the root of all evil". 

And they'd be wrong.

The Bible talks more about money than it does about Heaven or Hell.  Or marriage and divorce.  Or lots of other things.  And the main thing we need to know that it says is this The love of money is the root of all sorts of evil ( I Timothy 6:10).  And the rest of the verse warns  It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.

So before we figure out what to teach our kids about money, we need to be sure we have the correct info ourselves. Money is neither a sign of our success nor an indication of God's favor -- it is a tool that God wants to use to shape our character.  And the character of our children.  Period.  So use it wisely.

Here are the five things that Paul and I figured we needed to be sure our kids knew about money before they left home (because we wanted to be sure they eventually did leave home......).  And some ideas we use(d) to get the points across.

1.  How to give 
This was the most important lesson we wanted to get across.  To do this, we used allowance.  At about age 3, each child was given three jars (we like pickles at our house so we had an abundance of these to choose from!).  We cut a hole in the top for  money to slide through and we slapped a label on each one - "give", "save", "spend".  There are some fancy things available through Dave Ramsey  

or Crown Financial

but we go the simple route.  Pickle jars.  Being able to put that money in, hear it clink against the glass, and see it pile up over time - priceless.

Every week, Daddy distributed allowances.  Each little set of hands spread out on the floor and they counted the pennies he laid above each chubby finger.  Allowances increased as the years went by but at age three, they got ten pennies each week. And, beginning with that first allowance til they were old enough to have caught it, we thanked God for giving those pennies to be stewarded.  Pennies that went into each of the jars.  We didn't mandate a percentage but something had to go in each jar every time.  And the "give" jar was not a bank to be borrowed from - if the money got taken out of that jar, it was to take to church or missions organization or a charitable cause.  Again, no legalism.  It might be given to the man at the corner with the "will work for food" sign.  Or to purchase gifts for Operation Christmas Child.  But it was given away.  With no thought of (earthly) return.

Other ways we taught the lesson of giving - sibling gifts, baking cookies for neighbors, and anonymous gifts.  We've dropped goodies off at the police station and sent gift cards with no "sender" name to friends and paid for strangers' meals at restaurants, just for the blessing of giving. 

Learning to give develops the character traits we long to see in our children....and ourselves:  unselfishness, contentment, generosity, and gratitude to name a few.

2.  How to save

Pickle jar #2 - savings. Something from every allowance and later, from every dime earned, goes into savings.  And because we were aiming at teaching delayed gratification, we made this jar long term savings.   As in starting at age three, saving for a car at 16/17.  Yep.  Those little pennies were the beginning of "the car account".  Untouchable until time for a car.  Not only will this teach delayed gratification but it also encourages self-discipline, contentment, planfulness, and wisdom.  (Side note- why do my husband and I stress delayed gratification so much?  Because this character trait - or lack of it - plays a critical role in all areas of life ---- purity, faithfulness, diligence, integrity, marriage, work, service.  Pretty much everything.  Just think about it). 
When it came time to purchase the wheels, we matched what they had saved.  (In case you're worried about our management, we did transfer the jar contents to a bank and/or money market at a later age!) All those years of adding to that pickle jar paid off in a big way.

At about age 13-14, we had them sit down with a financial advisor ( a very kind friend who manages our investments and is generous enough to give our kids his time - trust me, he's not making a lot from our fund!!) This is where they learn about the stock market and bonds and compounding.  And they figure out quickly that it pays to start saving early. 

So the pickle jar was just for the car.  But sometimes there are needs for "short term savings" such as for a new bike or Christmas gifts for the family or an iTouch.  Over time, each of our children learned on their own to set up a "separate account", aka another pickle jar, for things they anticipated needing money for.  Talk about a great life lesson!  They're preparing themselves for establishing college funds for their own kids!!!!

3.  How to spend

Here's the fun part - retail therapy! Pickle jar #3!  Seriously, children need to be taught how to spend money.  Wisely.  Not just because it's in their pocket.  We teach largely by example how to be frugal and wise with the money God entrusts to us -- planning ahead, checking prices, no impulse purchases, garage sales, consignment stores, etc.  Why pay top dollar if you don't have to???  And the best way for them to learn this lesson is to have to spend their own money.  We're usually not as careful with someone else's cash as we are our own. 

We also feel it's a good idea if they don't have everything they want or even think they "need".  Learning how to spend wisely teaches delayed gratification (again), stewardship,resourcefulness, contentment, and self-discipline.   Good stuff. 

4.  How to budget

Same lessons taught as above and add patience. I cannot overstate the importance of kids learning how to budget.  From as simple as setting aside money to pay for Christmas gifts to realizing that they don't get to take home all that money listed at the top of that paycheck, budgeting is critical.  It's the overall plan of how/what to give, save, and spend.  And it needs to be specifically taught.

When my absolutely fabulous son-in-law came to ask Paul's permission to change Katie's name, my ever so practical and also fabulous husband made him present a financial plan before he would say "yes".  I whined that this was not very romantic but my wise husband insisted it was the most loving thing in the world for him to be sure they knew how they were going to live.  And he was right (again!!)  It turned out to be a very helpful exercise for both of them to learn about insurance and car payments and school loans.  Not that we trace all their subsequent success back to this plan but they surely are managing their adulthood very well!!!

Mary's about to leave the ivy towers of academics and enter the working world.  Paul has already made sure she understands about tax brackets and rent payments and social security.  She has had a good foundation of budgeting her money during college and this is the next step.

5.  How to work

When our kids were pretty little, Paul told me it was fine for me to focus on academics and social skills but he wanted to be sure our tax deductions knew how to work.  So we started early.  My number one suggestion for teaching work is spelled C-H-O-R-E-S.  You got it, household help. By age two your kiddos can unload silverware from the dishwasher and put it away.  (Bonus - helps with sorting skills).  Preschoolers can put toys and clothes away, wipe baseboards (for homes where that is done - I wouldn't know), dust, water plants, and chop veggies (yes, they can).  By elementary age, they can do laundry, make beds, vacuum, mop, mow lawns, weed, clean bathrooms and pretty much everything you need done.  Slave labor.  It's great.  Learning how to work teaches proper self-esteem, confidence, sense of belonging, obedience to authority, and satisfaction of a job well done.  THIS is what helps kids feel good about themselves - not hearing hollow accolades of flattery nor by receiving a "trophy" of participation.  But that's another post.

Our kids were motivated to work not because they were born loving it but because they needed/wanted the money.  We didn't raise allowances that much!  They have taught swimming lessons, started a lawn care business, baked cookies/cakes for the neighborhood, worked at the pool, taken care of pets, babysat and one even deals drugs but that's another story :)  And of course, they started it all with the quintessential lemonade stand!!  Capitalism at its best.

Money.  We want our kids to learn about how to make it, manage it, and give it away.  We want to use money to shape them so that their character will be "free from the love of money and content with what (they) have because God has said, 'Never will I leave you, never will I forsake you' ".  Hebrews 13:5.  Regardless of how much they have or don't have, if they catch that lesson, they'll be the most successful people in the world.