How can you practically model biblical money management to your kids?
There are seven major components of biblical financial stewardship that need to be passed on to our children, in practical ways.
The importance of tithing and giving
Because God owns it all, His wishes, desires, and priorities are the first thing we need to take into account when figuring out what to do with our money. Because God is Love and is generous, it stands to reason that generous giving should be central to the program.
You can teach the importance of giving by organizing a family mission project. This could be giving your children the opportunity to be in contact with people who have more physical and economic needs than your family does.
- Delivering meals for a food ministry.
- Volunteering in a soup kitchen or homeless shelter.
- Sponsoring a child in another country.
The rewards of work
Kids need to understand the fundamental connection between work and financial resources. They need to know that “money does not grow on trees” – that people are supposed to provide for their own needs and the needs of others through honest labour:
A good way to drive this point home is to hire your kids to do tasks around the house. Even if they get a regular allowance, you can still give them an opportunity to earn extra money by working for it. Post a list of chores on your refrigerator or family bulletin board. Call it your “For Hire” list. Beside each job, include the amount to be paid for the work and how frequently it can be done – for example, scrubbing the tub or shower (once a week), cleaning out the garage (twice a year), or washing the car (as needed). Let your child know that paid labour is evaluated by inspecting his or her work after it’s done and reducing the pay if the quality of the work doesn’t meet your expectations.
The wisdom of saving
We want our kids to develop the habit of putting aside a portion of their money in savings. Children should be trained to see the value and importance of delayed gratification. The definition of financial maturity is “giving up today’s desires for future benefits.”
Buy them a piggy bank and encourage them to use it. You could encourage them to open a “Home Savings Account” and pay them interest on the cash deposits they entrust to your safekeeping (you can call the interest a “reward for savings” if it makes things simpler.
The necessity of budgeting
If kids are to succeed in this world, they’re going to have to know how to work with limited resources. For Grandma, there was no such thing as an extended line of credit – when the money in the jar was gone, the spending was over. If your children can grasp that idea, they’ll learn to steward their cash with greater thought and care.
Beginning about age eight, give each child a recipe file box containing five letter-sized envelopes: a Tithe envelope, a Save envelope, a Spend envelope, a Gifts envelope, and a Clothes envelope. In each envelope put the cash amount that you as parents have budgeted for the item in question for the current month. Then let the kids have control and responsibility for the use of these funds. In reality, you’re simply turning over certain areas of the family budget – items you’d be paying for anyway – to your child as a way of developing his or her financial skills. That’s the important point to bear in mind.
The cost of consumption
Every purchase is a tradeoff. If you spend a certain amount of money today, you’ll have that much less to spend tomorrow. And due to the principle of compounded interest, the cost or tradeoff isn’t dollar for dollar. One dollar spent today removes multiple dollars – dollars that might have been gained through savings and investments – from your future resources.
Identify an item that your children tend to waste money on – for example, candy, ice cream, or video games. Ask them how much the item costs. When they answer, say, “That’s how much it cost today. But what does it cost in terms of what you’re giving up? When they look confused, help them calculate an average annual amount spent on their luxury – for example, $2.00 per day, four days a week adds up to $416.00 per year. Now compare this to the alternative of saving that money. Let’s say your children buy a $2.00 treat just once a week instead. They save the rest – which comes to $312.00 per year. Saving that money for forty years at a 5% interest rate will result in over $39,500. Be sure to point out that only $12,480 ($312 times forty years) was saved. The other $27,020 comes from compound interest.
Kids (and adults) who understand the cost of consumption will weigh potential purchases more carefully. They’ll learn quickly that by being smart shoppers, they have more money available to do other things.
Advertisers of cars, big-screen TV’s, and boats rarely mention the actual purchase price of the items they’re selling. Instead, they say, “Only $399.00 per month.” Examine some of these ads with your children. Read the fine print to find out the total cost of the item and how many monthly payments would be required to complete the purchase. Your kids will be amazed.
As kids get older, teach them the wisdom and value of setting long-term as well as short-term goals. Even an eleven-year-old can understand that if he/she doesn’t spend the money earned during the summer months, enough can be saved to buy a car in the future.
Has your child ever begged you to buy the latest toy or doll or electronic gadget? The next time this happens, turn the circumstance into an opportunity to teach long-term planning. Say something like, “Looks like it’s time to start saving your money.” Then help your child set a goal and use visual reminders to achieve it. You can do this by finding a picture of the item wanted. Post it in a prominent place. You might even consider drawing a big thermometer on a poster board and having your child colour it in as the amount of money saved approaches the goal.
Teaching your kids about money doesn’t mean sitting the whole family down for a lecture on money. Instead, it’s a matter of sharing your ideas and values with your kids as you go through the routines of daily living together.
And here’s the point: there’s no way to calculate the power of lessons like these when delivered in a real-life context.