How to Teach Your Children About Money
About 6 years ago my wife and I bought our then eight-year-old son a brand new drum set. For the first few days, all we heard throughout our house was the constant beating of drums and clanging of symbols, and it almost drove us crazy! We told our son he needed to take care of his new gift, but he didn’t heed our advice. Within a few weeks, the drums were broken and torn up. For months after that he begged my wife and I for another drum set, but we told him no. We told him since he treated the gift we bought him so poorly, he would have to save his own money and buy his own drum set.
After a year of saving all of his allowance money and money he received for Christmas and birthday gifts, he finally saved enough to buy his own drum set. Well guess what happened? He didn’t treat the new drums the way he treated the ones his mother and I bought him. Because he had to invest his own money in his own drums, he had a different perspective. He took care of these drums, and to this day he still has them. The lesson is this: although my wife and I had the money to buy him another drum set, we wanted to use the situation as an opportunity to teach our son about the responsibility and the value of money.
Each generation of parents is responsible for passing on the truths found in Scripture to their children. Proverbs 22:6 states we should “train up a child in the way he should go, even when he is old he will not depart from it.” It is parents, not MTV or BET, that should be responsible for training their children about finances. In general, most parents spend 18 to 22 years trying to prepare their children for life and adulthood, but only a few of those hours are spent on teaching them the value and use of money they will use throughout their lives.
In order to teach God’s principles of finance and how to handle money, parents should use three methods:
Talk To Your Children About Money
"These words, which I am commanding you today, shall be on your heart. You shall teach them diligently to your sons and shall talk of them when you sit in your house and when you walk by the way and when you lie down and when you rise up" (Deuteronomy 6:6-7). Parents need to make sure they communicate about money to their children. This includes sharing some of your financial successes and challenges. If God blesses you financially, let the children know how it happened. On the other hand, if you’re having financial challenges, don’t completely hide the situation from your children. Use whatever situation you are in as a teaching opportunity for your children.
Practice What You Preach
Parents must also "practice what they preach" by being good examples. Because children are so impressionable, they easily recognize and adopt their parent’s attitude toward money. Therefore, parents must be godly role models on how to handle money. "Everyone, after he has been fully trained, will be like his teacher" (Luke 6:40). In other words, parents can verbally teach what they believe, but they reproduce who they are and what they live.
Let Them Practice Handling Money
Children need to be given the opportunities to see how God’s financial principles are applied in the lives of their parents and need to be given the opportunity to apply them themselves. Allowing children to make some financial decisions on their own (with their own money) will allow them to see how their choices can affect their life. Sometimes they are not going to make good financial decisions with their money, but those lessons will be unforgettable.
There are certain areas of financial teaching that parents need to adopt as their primary focus: income, budgeting, saving, debt, and giving.
Income. As soon as a child is ready for school, he or she should begin to receive an income to manage. Whether that income is earned or given as an allowance, encourage them to discipline their spending to remain within their income.
Budget. As soon as children begin to receive income, they should be taught how to divide that income into categories and to budget. The categories may be as simple as saving, spending, and giving. Whatever the case, encourage them to budget and not to spend their entire income on personal desires just because they have it to spend.
Saving. Children should be encouraged to save a portion of their incomes regularly and not to deplete their savings when they want to buy something that they feel they need.
Debt. Parents need to teach their children the cost of borrowing and how difficult it is to get out of debt once they are in debt. They should be encouraged to stay out of debt and to purchase with cash whenever possible.
Giving. Parents must instill within their children that the first part of any and all of their incomes belongs to the Lord.
As you can see, parents must make financial training a priority, and they must discipline themselves to be consistent in their instructions and in their example. It’s not always easy, but it’s always worth it for you, your children, and for generations to come.
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