Part
1 of 2 parts
“Train up a child in the way he should go, even when he is old he
will not depart from it” (Proverbs 22:6). The Word of God is very
specific concerning parents'' responsibility to train their children.
Where do parents start?
Where to start
The way to train children is actually very simple. Whatever principles God
establishes for parents, the parents should pass along to their children.
The difficulty comes in deciding which principles to teach at what age and
how to get children to understand.
However, here are three principles that are applicable both to parents and
to children.
- Teach by example that God owns it all. Parents need to
demonstrate that they're willing to put aside indulgences and personal
wants in order to meet the needs of the family and others. Parents
should let their children see them pray for God's provision concerning
material needs and let the children know that borrowing is not God's
best for the family.
In addition, parents need to show by example that the tithe is the
first thing that is faithfully paid out of every paycheck. This will
instill in the children the principle of tithing and giving back to
God the firstfruits of their income. Then, as soon as they begin to
receive money, children need to be encouraged to pay the tithe first.
- Exercise self-control. There's no way parents can establish
financial discipline in their children if they themselves are not
disciplined. Parents should share their budgets with their children
and show them how to save money to buy clothes, repair the car, buy
Christmas and birthday presents, or take vacations.
Parents need not only to teach but also to practice moderation,
regardless of their ability to generate income. God's instructions
require that we exercise discipline in everything we do.
- Live on a budget. No matter what the family income is, a
budget is needed. Begin at an early age teaching children how to
manage their money and how to divide it into different parts.
General training
The family is a community, and everyone in the family shares in the
opportunities, responsibilities, rewards, and income of that community.
As part of the family community, children are responsible for certain
household duties for which they are not paid. These could include cleaning
their rooms, doing dishes, and picking up toys. However, for children to
learn the value of money they need to have an income.
Many parents choose to give their children an allowance—especially
younger children through preteen years.
An allowance should not be tied to work-for-pay projects. It is strictly
money given to children with no strings attached.
Nevertheless, parents need to set allowance guidelines. The allowance
should be large enough that the children look forward to receiving it, but
it shouldn't be so large that it takes care of all wants and needs.
They should learn how to save for the things they want. Just like parents
receive raises at work, children also should receive allowance raises.
In addition to allowances, parents also should provide paying jobs for
their children. These might include mowing the lawn, weeding the garden,
cleaning the garage, washing the car, washing windows in the house, and so
on. Children should be paid equitably according to what parents are able
to afford.
Not only must parents be fair, they also should be firm and insist that
their children observe some simple rules.
- Pay children only for jobs completed. “He who tills his
land will have plenty of bread, but he who pursues worthless things
lacks sense” (Proverbs 12:11). For children to learn the value
of being paid for work done, parents should not pay them unless all
the work has been completed that they had agreed to do. In other
words, parents must avoid paying 50 percent for 50 percent of work
completed.
After the work they had agreed to do for a certain amount of money is
complete, they should be paid the full amount. Nonetheless, parents
need to reward exceptional or extra (more than what was agreed upon)
work with bonuses.
- Pay for quality work. “Whatever you do, do your work
heartily, as for the Lord rather than for men” (Colossians
3:23). Children should understand that they will be paid for work well
done. This does not mean that they have to do things perfectly; they
may not have the ability to do things as well as adults. It does mean
they need to do the best they can do and take pride in their
accomplishments.
- Pay fairly within the family budget. Parents must pay their
children a fair wage but not be excessive. Paying children too much
for work likely will cause a distorted value system after they get
older.
- Encourage sharing. Encourage children to set aside a portion
of their wages to give to missions, the poor, or to other worthy
causes. This is in addition to the tithe.
- Encourage saving. “There is precious treasure and oil in
the dwelling of the wise, but a foolish man swallows it up”
(Proverbs 21:20). Parents can discourage debt by encouraging saving.
Children who learn how to save for the things they want, rather than
having parents get them by charging, will as adults be more inclined
to save for wants, rather than going into debt to get them.
Govern spending habits
One of the best things parents can do for their children with regard to
financial discipline is to establish some ground rules that will serve to
govern how much money they will receive and how they are allowed to spend
it.
Nevertheless, these rules cannot be too restrictive; parents should want
their children to experience the freedom of spending their money on what
they want to buy. In addition, this will give them room to make occasional
mistakes in their purchases—mistakes they can learn from later.
Children should think hard about spending choices, but their mistakes
should never be over-emphasized. Rather, when parents see their children
make wise buying decisions, it is time for plenty of praise.
Conclusion
With regard to financial management, parents' goals should be slowly to
develop financial discipline and wisdom in their children.
It doesn't happen overnight; but, with consistency the seeds of
responsibility that parents sow will eventually take root in the lives of
their children and will yield results in their future financial dealings.
Part
2 of 2 parts
“Train up a child in the way he should go, even when he is old
he will not depart from it” (Proverbs 22:6).
In Part 1, we discussed the general guidelines that parents
need to follow when teaching their children how to exercise
responsible financial management.
In Part 2, we will discuss specific guidelines relative to
particular age groups of the children, taking them from pre-budget
to full budget by the time they are living on their own.
Age 8 and under
As soon as children are old enough to understand what money is and
to receive and spend it, they are ready for a pre-budget.
This pre-budget should be a model of simplicity that encourages
children to begin to divide their money into different categories.
Parents can begin by setting up three piggy banks: one for Giving
(tithes), one for Savings, and one for Spending. They then can
divide the children''s allowance or earned money (during this age
period most of their money will be an allowance) into three equal
parts and have the children place equal amounts in each bank.
By age 6 or 7, children should be taught the concept of tithing, or
placing ten cents out of every dollar into the giving bank. The
remainder should then be divided so that 50 cents of every dollar
would go into the savings bank and 40 cents into spending.
To make budgeting easier for the children, parents should give them
their allowance in increments that are easily divided. As an
example, give them four ones and change rather than a $5 bill.
Each time parents give their tithe, children also should give the
money they've placed in their giving banks.
Money placed in spending banks is to be used to buy the things the
children want and which parents should not buy for them. These would
include small toys, baseball cards, gum, and so on. However, they
need to understand that once those funds are gone they are not
permitted to take from the giving or savings banks to buy items they
want.
Money placed in the savings bank is for the purpose of attaining a
certain goal. That goal should not be so far removed from the
present that they feel it is unattainable, but it also should be far
enough down the road that saving is necessary if the goal is going
to be met. Examples would be saving to attend a ball game or go to
an amusement park, for extra money to spend at summer camp, or to
buy a special gift.
Age 9-12
By the time children reach the age of 9 they should be ready to move
into a mini-budget.
With this mini-budget, expenditures and income should be recorded in
a small notebook. This budget is a little more complex than the
pre-budget: 10 percent is allotted for Tithes, 25 percent for
Short-term savings, 25 percent for Long-term savings, and 40 percent
for Spending.
Short-term savings should be for something for which they will have
to save from three to six weeks.
Long-term savings is for something they will have to save for three
to six months, or longer, if they choose to save longer.
The goal with this mini-budget is to get children into the habit of
keeping tabs on their finances and saving for both short-term and
long-term goals.
It is also during this age period that children should be encouraged
to supplement their allowances with work (inside or outside of the
house) for which they would get paid.
By age 12 it should not be unusual for more than half of their
income to be generated from paid work.
Teen years
These are critical years for children—the transition years to
adulthood.
By this time the basics of personal finances and budgeting should be
understood by children and are being applied.
Written records (including checking accounts by age 16) and budgets
should by now be a fundamental part of children's financial
planning. These budgets should be categorized into Tithe (10
percent), Taxes (5 percent), Short-term savings (25 percent),
Long-term savings (25 percent), Expenses (10 percent), and Spending
(25 percent).
The new Taxes category is designed to prepare children for paying
taxes, without actually getting the government involved.
Parents should set up a “bank” into which the children will
deposit their tax money. Parents may want to add matching funds to
the “bank.” This money cannot be spent before an established
amount has been accumulated. Then the family can decide how the
money should be spent. However, contributions to the fund do not
end; they just start over again.
The new Expenses category is intended to prepare children to pay
utilities and other monthly bills.
Parents need to figure what 10 percent of their children's income
will be and then find a monthly bill that matches that amount. It
could be a portion of the phone bill, cable television bill,
magazine subscriptions, and so on. When the bill arrives each month,
the children's allocated 10 percent will be used to pay the bill.
Within limits, children in their teen years, especially from 16 to
20 years, should be allowed to make their own financial decisions.
Certainly, these decisions will vary by age and personality, but the
more opportunity parents allow, the clearer picture parents will
have of whether the children are ready to be financially
independent.
These decisions become notably applicable when children start
working outside of the home, at which time parent allowances should
stop.
With maturity comes added responsibility. Therefore, parents need to
allow their children to share in the financial responsibility of
caring for expensive items, such as cars.
Parents should insist that their children pay for insurance, a
portion of the maintenance and upkeep (perhaps charge them 5 cents
per mile, as an example), and all ticket or parking violations
(parents might want to consider suspending driving privileges for
serious offenses).
Conclusion
Parents are not raising children; they are raising future adults.
So, they must not allow their children to leave home without
learning and understanding the basic principles of financial
management as recorded in God's Word.
Anything less would be detrimental to their financial survival after
they are on their own.
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