Teach Your Children Money Management
They—and you—will be glad you did!
Nearly 60 percent of parents provide financial support to adult children, according to a May 20, 2011, article in Forbes magazine. “The majority of parental help is housing (50%), living expenses (48%), transportation costs (41%), insurance coverage (35%), spending money (29%), and medical bills (28%).”1
What’s wrong with this picture?
There may always be times our adult children will need our help, but is there any way we can train our young children to be good money managers so that when they grow up, they can be equipped to avoid this parental dependency trap as far as possible?
As we have raised our three children to adulthood, my wife, Lois, and I have tried three things we highly recommend in preparing children to manage money in a way that is pleasing to Jesus:
1. Use allowance to teach faithful financial stewardship.
When each of our children turned 3 years old, we began giving them an allowance based on a dollar per month times their age. This was so they could learn to manage money. I remember some of those first allowance lessons.
“Jacob, you’re 3 years old, and we’re going to start giving you an allowance. When I get my paycheck each month, I’ll give you a dollar for each year old you are. Here’s three dollars,” I said as we sat together at the dining room table. There were three piles of dimes and nickels, each totaling a dollar.
“How much of this belongs to Jesus?” I asked.
“All of it!” he beamed.
“That’s right,” I said. “Now, out of each of these piles we need to give one dime, or 10 percent, for Jesus and His workers around the world. That’s called ‘tithe.’ ” I helped him slide a dime from each of the three piles off to the side, forming the “tithe” pile.
“Next, we give offerings for Jesus’ work. Let’s start with a nickel, or 5 percent, from each pile.” We moved three nickels over to a new pile near the “tithe” pile.
“Now we need to put money into savings. When you go to the store with Mom and you tell her you want something, she’ll ask you how much you have in savings. We’ll start with 15 percent, or a dime and a nickel from each pile.” We moved money to the “savings” pile.
“The rest of the money is ‘spending’ money. Do you want to give any extra money for Jesus and His workers and work?” When the children were young, they would move lots of coins from the “spending” pile to the “tithe” and “offering” piles. But as they got older, they moved less and less of it over. I thought of the verse in which Jesus said, “Unless you . . . become like little children, you will never enter the kingdom of heaven” (Matt. 18:3).
As the children grew older, we developed some more techniques:
We showed them how to fill out their Tithe and Offerings envelope, marking tithe on the proper line, and then deciding how to distribute their offering among local, conference, and world offerings as they chose.
When they wanted to buy something they had been saving for, we would match them three to one (we would pay 75 percent, and they would pay 25 percent) if it was something that would help them grow spiritually, and one to one for something practical. But they were on their own for things we didn’t think had much value.
I would pay twice the going rate for interest on their savings to encourage more savings.
They could ask to do additional chores around the house so they could earn additional money.
Each year after their birthday their allowance increased a dollar per month. When they turned 16 or so, they might say something like “Come on, only $16 a month?” to which we would reply, “Maybe it’s time for you to look for a job!”
For birthdays and Christmas we would give them practical things such as clothes, books from the Adventist Book Center, etc., plus a few extra treats, and occasionally something special, such as a keyboard, guitar, drum set, or video camera.
When they were old enough and responsible enough to drive and pay for gas and insurance, we would sell them one of our older cars for $200.
We covered all their tuition for Adventist education through college, since we considered this one of the best investments we could ever make for their spiritual and financial future.
We discovered throughout the years that “he who is faithful in what is least is faithful also in much” (Luke 16:10, NKJV).2
2. Give the “$1,000 challenge.”
When our children were each about 5 years old, we told them that if they never ever used tobacco, alcohol, or illegal drugs, we would give them $1,000 on their twentieth birthday. Why? Because . . .
We knew that most addictions like this are formed before a person turns 20.
We figured that if anyone tried to pressure our children to experiment with these things, they could tell them that they didn’t want to lose the $1,000, and that they knew their parents would find out.
If we saved only $5 per month from age 5 to age 20 (with interest), we would have the $1,000.
On Jacob’s twentieth birthday we asked what he was going to do with his $1,000, and he jokingly said, “Go out and throw a beer party for all my friends.” But then he added more seriously, “Mom and Dad, I want you to know that I have never ever tried tobacco, alcohol, or illegal drugs. And I’m still a virgin, and proud of it!”
I looked over at his younger brother and sister and said, “That’s included in your $1,000 too!”
3. Live on only one salary as long as possible.
When Lois and I first got married, we decided to learn to live on only one salary. We had friends who got used to two salaries, but when their first child came along, they experienced all kinds of financial and emotional pressures because of decreased income and increased expenses.
On payday Lois would return tithe and give offerings, and then put the rest of her check into our savings account. It was amazing how fast the savings grew. By avoiding debt and building savings, we were able to buy a used car with cash just a few years later.
We did live more simply than some of our peers. We didn’t drive as new a car or live in as expensive an apartment or house, but we didn’t feel financial pressures, and we learned to postpone things until we could pay for them in cash. When children came along, my wife quit working for a few years to be home with them, but we didn’t feel a major financial pinch, because we were used to living on only one salary.
When the children started school, my wife went back to work. At this stage of life we found it difficult to live on only one salary, but now her salary was available to help keep our children in Adventist schools. By living on only one salary for our early years of marriage and child rearing, we had learned a lot of lessons in simple, joyful, inexpensive living that we hope were passed on to our children.
As we move closer and closer to the return of Jesus, it is more important than ever to have our finances under the control of the Holy Spirit and to train our children to manage money in a way that will glorify God. Listen to these inspired insights recorded in The Adventist Home, by Ellen White:
“When very young, children should be educated to read, to write, to understand figures, to keep their own accounts. They may go forward, advancing step by step in this knowledge. But before everything else, they should be taught that the fear of the Lord is the beginning of wisdom.” 3
“Parents are to bring up and educate and train their children in habits of self-control and self-denial. They are ever to keep before them their obligation to obey the word of God and to live for the purpose of serving Jesus. They are to educate their children that there is need of living in accordance with simple habits in their daily life, and to avoid expensive dress, expensive diet, expensive houses, and expensive furniture.”4
“If you have extravagant habits, cut them away from your life at once. Unless you do this, you will be bankrupt for eternity. Habits of economy, industry, and sobriety are a better portion for your children than a rich dowry.”5
“A Parent Reproved for Extravagance
—You do not know how to use money economically and do not learn to bring your wants within your income. . . . You have an eager desire to get money, that you may freely use it as your inclination shall dictate, and your teaching and example have proved a curse to your children. How little they care for principle! They are more and more forgetful of God, less fearful of His displeasure, more impatient of restraint. The more easily money is obtained, the less thankfulness is felt.”6
“The very best legacy which parents can leave their children is a knowledge of useful labor and the example of a life characterized by disinterested benevolence. By such a life they show the true value of money, that it is only to be appreciated for the good that it will accomplish in relieving their own wants and the necessities of others, and in advancing the cause of God.”7
That’s the legacy I want to leave for my children. How about you?
- Jenna Goudreau, “Nearly 60 percent of Parents Provide Financial Support to Adult Children,” Forbes, May 20, 2011, www.forbes.com/sites/jennagoudreau/2011/05/20/parents-provide-financial-support-money-adult-children/.
- Texts credited to NKJV are from the New King James Version. Copyright © 1979, 1980, 1982 by Thomas Nelson, Inc. Used by permission. All rights reserved.
- Ellen G. White, The Adventist Home (Nashville: Southern Pub. Assn., 1952), p. 386.
- Ibid., p. 375.
- Ibid., p. 390.