When one of my daughters was seven-years-old, she thought that all one had to do to get money was to go to an ATM and take it out! She was quite surprised to learn that you actually had to have something in the bank to take it out! The sooner parents begin teaching their kids about money, the better off they’ll be! The late Larry Burkett, the founder of Crown Financial Ministries, once gave some advice I’ve found helpful on what kids need to know, that I’d like to pass along to you.
1. Kids need to know that money is not the most important thing in life. A person’s attitude toward finances is an indicator of his or her heart. Jesus said, “For where your treasure is, there your heart will be also ” (Matthew 6:21). In His teachings and parables–whether the rich young ruler, the lost son, the widow’s mite, the sheep and the goats, or many others–Jesus taught that what we do with our money and our possessions is a direct reflection of what is in our hearts. Our checkbooks are like thermometers, measuring the heat of our love and commitment to God and His principles. Our Lord emphasized that we “cannot serve both God and wealth” (Luke 16:13). Everyone serves one or the other. Your heart will be devoted to the one you serve, and your actions will demonstrate which you are serving. Our kids’ hearts will be found wherever their treasures have been buried.
2. Kids need to know about 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 is a decision that must be made by the parents. But whatever the choice, parents need to begin to instill within their children that boundaries must be placed on how money should be spent and that spending must not exceed income. In other words, encourage them to discipline their spending to remain within their income, discourage them from borrowing, and impress the need to save and accumulate in order to buy.
3. Kids need to know about budgeting. 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. Encourage kids to budget and not to spend their entire income on personal desires just because they have it to spend.
4. Kids need to know about saving and investing. Children should be encouraged to regularly save a portion of their incomes and to not deplete their savings when they want to buy something that they feel they need. Saving must be ongoing, and if any of it is withdrawn and spent, it should be replaced. Eventually they should be taught the difference between emergency savings, long-term savings, and investment saving.
5. Kids need to know about 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.
6. Kids need to know about tithing. Parents must instill within their children from the very beginning the mandatory necessity of tithing to the Lord and help them understand that this is a principle that must not be compromised. The first part of any and all of their incomes must be tithed to the Lord–before personal purchases, savings, or recreation.
7. Kids need to know about generosity. In addition to tithing, parents need to encourage their children to set aside a certain amount of their incomes to help people in need, such as missions or special humanitarian projects or to purchase or give items for the benefit of others.