Kids & Money
With so many things to teach my kids, why should I focus on teaching them about money? Knowing how to manage money well is something your kids can carry with them for the rest of their life! Just like we want out kids to be healthy spiritually, physically and emotionally, we also want our kids to grow into financially healthy adults.
“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.”
Proverbs 21:5
When my husband and I gave our lives to Jesus our finances were way out of whack! We had student loans, vehicle loans, lots of credit card debt and were living paycheck to paycheck. We didn’t know how to manage money, and we definitely could not have taught our children how to do so successfully. First, we chose to work on our own money situation and got to a place where we were thriving financially instead of barely surviving. (This did not happen overnight!) More of what our kids learn from us is learned by our example then our words. Therefore we needed to be healthy financially for our kids to see its real value for themselves.
As our kids have grown, one of the things that is super important to us is that our kids don’t make the same financial mistakes that we made. We talk to them regularly about money, teach them how to be generous, how to save and how to manage what they have. So much of what I’m going to share I learned from the book Smart Money Smart Kids by Dave Ramsey and Rachel Cruze. I highly recommend reading it!
Having your kids understand the connection between work and money early is so important! This is the foundation for building a healthy work ethic in your kids. This teaches your kids to understand the value of money, to not have an entitlement mindset and use the Bank of Mom & Dad for each and every want. One of the hardest things in my parenting journey is to allow my kids to FAIL with money. Yes, you read that right! We provide them with wisdom when they are getting ready to spend their money. But we let them choose. Not allowing our kids to fail and feel the pain of this failure now, when the cost is low, means that the first time they will fail with money will be when they are older and the stakes are much larger. It’s so hard! We’d rather make all the right decisions for them. But that’s not our jobs as parents. Our job is to teach them how to make the best decisions they can. They can’t learn that if we don’t give them the opportunity to make their own decisions.
So how do we teach this to our kids? When do we start? What do we do? Glad you asked all those questions!
Ages 3-5
GOAL:
Connect earning and spending
Make it visual and visible
Pay your kids each time you have them do a chore. They connect the work they just did with the money they earned. Have them put in the money into clear jars. Use dollars not coins so the jars look full quicker. After they have some saved up, take them out to have fun spending the money they earned.
Examples of chores they can do:
Putting toys away
Putting dirty clothes in their hamper
Cleaning their room
Helping with other chores that can be supervised: setting the table, cleaning/straightening up, making their bed
Ages 6-13
GOAL:
Grow their responsibilities with their age and their earned amount
Teach Give, Save, Spend every time they earn money
Give: Teach your kids to put God first in their finances. Let them put their own tithe in the offering plate. Encourage other ways for them to be generous.
Save: Goal setting for a large dollar amount toy or electronic purchase. Teaches delayed gratification, goal setting, and patience.
Spend: Let them choose how they want to spend their money so they can feel the joy of spending money they worked for.
Pay them weekly for the chores they did that week (just like they would get paid at a job). Have some chores they do because they are part of the family and some they get paid for. Distinguish between the two. Non-paid chores teach kids how to be a good team member and contribute to the family. Use an envelope system with your kids to separate their three categories of money.
Examples of chores they can do:
Take out trash
Feed pets
Clean table
Load/unload dishwasher
Make bed
Clean bathroom
Water plants
Yard work
Clean car
Age 14+
GOAL;
Teach your kids to budget
Hold them accountable.
Figure out how much your kids need for all their expenses for one month: entertainment, clothes, gas, other needs. Deposit the full amount monthly into a checking account for them. Have them budget out their needs and purchase all their own items, including tithing and putting money aside for savings. Provide them with wisdom on their spending, but let them make their own choices. Hold them accountable for their choices. Once the money is gone, they need to wait until the next payday, just like an adult would at their job. This will be a process, and they will make mistakes often. Don’t use “I told you so” as a weapon. Teach them with love and grace.
Encourage your teens to pursue work outside the home.
Have them figure out a need and a way to fill it by starting their own business. Don’t limit their ideas. Encourage them to be creative.
Working outside the home teaches them to learn to work with people other than their parents and how to work as a team.
Prepare them to be in the workforce so that they don’t fail the first time they are in the workforce as an adult.
It’s a parent's responsibility to teach their kids a good work ethic and how to manage money. Don’t rely on the school or the church to do this for you!
Encourage them to pursue work that they enjoy!
These are just a few ways to begin the conversation with your kids about money at whatever age they are at. Let us see how you teach your children about understanding and managing money! Tag pictures with #NoOrdinaryFamily on social media