Teaching Your Kids About Money

If you’ve not already figured it out, everyone out there is teaching your kids about money, or at least trying for all they’re worth.  Think about it…TV commercials scream about how your kids “need” to spend money on the latest toy or gadget.  Movies (even those supposed kid-friendly ones) portray that money buys happiness and fame. Popular music teaches valuable life lessons such as, “I ain’t coming out for less than a 100 thou” (Nicki Manaj) or, “grab that cash with both hands and make a stash” (Pink Floyd).  Wow, what enrichment your children can gain from popular culture…and they will, if you don’t teach them any differently.

Allow me to contrast the world’s approach with a few things God’s Word teaches about money:

• “The earth is the Lord’s, and everything in it, the world, and all who live in it;” (Psalm 24:1)
• “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.” (Matthew 6:24)
• “Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.” (Romans 13:8)
• “Trust in the Lord and do good; dwell in the land and enjoy safe pasture. Take delight in the Lord, and he will give you the desires of your heart.” (Psalm 37:3-4)

Do you see a problem here?  I do.  As a parent, I am responsible for my children.  It seems pretty clear that I have several assignments in scripture, one of the primary ones being to, “Train up [my] child in the way he should go…” (Proverbs 22:6a)  I don’t believe it is an accident that the verse immediately following that particular assignment is, “The rich ruleth over the poor, and the borrower is servant to the lender.” (Proverbs 22:7) Why is that such a big deal?  Well, that’s what I want to get into today.  What is it I should do to teach my kids about money?  Here are five things you should start doing TODAY to teach your kids about money.

1. Teach (and Model) the Concept of Stewardship

Since culture is teaching kids about money, don’t you think God deserves a fair shake at teaching them a bit about it too?  Your kids need to know that God owns everything (remember Psalm 24:1 from earlier?), that everything we have is a gift from Him (James 1:17) and our job as God’s children is to be a good steward (or manager) of all he gives us (1 Timothy 6:17-19).

2. Teach (and Model) Generosity and Mercy

Did you realize we are all selfish by nature?  I didn’t have to teach Annie or Andy that. But if you don’t want your kids to grow up to be punks who are only in it for themselves, you need to teach them that you (and God) expect them to be generous.  Most people can be nice when it will benefit them – the whole “you scratch my back and I’ll scratch yours” concept.  What I’m talking about is a realization that only comes when you act selflessly a few times and see how good it feels to know you can make a difference.  Your kids need you to show them how that feels – whether it is giving sacrificially, showing compassion to someone in pain or simply being willing to lend a helping hand to someone in need.

3. Promote Responsibility

I recently called Annie down for being mean to her brother.  She hadn’t slept well the previous night and it showed in her attitude.  We had endured this for most of the day, so I finally told her, “Annie, if you don’t work on showing kindness to your brother, I’m going to send you to bed right now so you can sleep off this nasty attitude.”  Her response: “Prove it.”  Needless to say, she went to bed at 5:54 pm that night.

We must teach our children they are responsible for their words and their actions – good or bad.  They must understand, “The mouths of fools are their undoing, and their lips are a snare to their very lives.” (Proverbs 18:7)

When it comes to money, most kids have no clue what things cost.  If your kids are old enough to understand, let me recommend a great exercise.  Give each of them a temporary “job” with a small, agreed-upon wage.  Then, on their first pay day, take them grocery shopping.  If they want something that isn’t on your grocery list, it is up to them to buy it.  It is amazing to watch kids decide what they will buy vs. what can stay on the shelves when it is their own money at stake.

4. Income – Savings – Expenses = 0

This simple math formula is one I repeat constantly in my writing and speaking.  The math of a budget is very simple.  It isn’t about math – it is about behavior, and your kids need to understand that concept.  The moment they have any of “their money” they will act in a way that comes naturally.  That usually either means they spend every penny at the first opportunity or hoard it like they will never receive another penny…ever.  You are the one who can show them that they should use their income wisely.  Teach them they ought to save some, give some and spend some.  The balance of how much goes into each of those categories is something you will have to decide on, but make them start thinking about this concept and making decisions about how to use their income wisely.

5. Share Reality

I used to teach personal finance as a volunteer in some local high schools.  We covered basic topics like balancing a checkbook, filling out a deposit slip, learning the difference between needs, wants and wishes, etc.  It was all very foundational and basic stuff.  But MOST of these high schoolers had no clue.  They couldn’t write a check, make a deposit or balance a checkbook.  The concept of budgeting was totally foreign!  Yet some of these kids were behind the wheel, working their first job, dating, and a myriad of other things that should require a level of maturity that could do a simple budget.

While I know a lot of schools today are improving their financial education, it is not the school’s responsibility to make your children responsible fiscal citizens.  Should I repeat that?  When your kids graduate from high school and can’t do a budget, that is the parents’ fault – not the school’s.  YOU are responsible to help your kids learn.  What’s the best way?  Share reality with them.  Let them help with your household budget (you’d better be doing one!). Let them help write some of the checks or go online with you when you pay bills.  Let them see where you struggle financially and where you shine.  They need to see the reality that Mom and Dad aren’t made of money and stuff is expensive!  Be age-appropriate, but even at a young age, your kids will learn a TON by your leadership in this area.

Well, there are five big things you can do to help your kids get straight with money before it is too late.  I’m sure I could keep writing, and one day I may actually write a book about my experience raising our kids debt free.  Give me a few more years on that one. ;0)

Your turn – what can you share about how to keep your kids on track with money?