How To Teach Your Kids To Handle Money

I was out shopping with our oldest, Rachel, who at the time was a preschooler. She requested a purchase. I let her know we did not have the money for it, and she loudly told me, “Don’t worry mom, just charge it.”

After the “charge it” exchange, my husband and I talked about how we might better train our kids about the value of money. We wondered, what were the priorities we should be teaching? How not to go broke? How to save? The more we talked, we realized, the best thing we could probably teach her is what we’d learned from following Jesus.

It sounds kind of backwards, but in God’s economy we are actually blessed when we give to others. There’s this crazy verse in Proverbs 11:24-25 that says, “One gives freely, yet grows all the richer; another withholds what he should give, and only suffers want. Whoever brings blessing will be enriched, and one who waters others will himself be watered.” Without understanding the value of money, kids don’t understand gratitude and generosity. We wanted to raise kids who were wildly generous, who were givers and tithers (giving 10% back to God through the local church). But how?

The first step was to figure out a plan. We’ve experimented with several methods. Some were huge flops while others were somewhat successful in teaching our kids about money. Our kids are adults now, and when we ask them what “one thing” taught them the most about money, they say it was actually years of experience and discussions that did it. (Turns out, Deuteronomy 6 is right!) Parenting and training our kids happens while we’re doing life. While we’re in our homes, while we’re traveling—all the time.

Still, one thing stood out to us: Keep it simple. If you need a calculator and a spreadsheet, the training method may not be sustainable. We didn’t give our kids a weekly allowance. We tried, but weeks would go by and we’d forget and then felt like failures (‘cause if consistency was part of success, we did fail). So instead as we approached different seasons we helped the kids budget and gave them money for their needs. For example, they’d get some money for back to school shopping. We’d give enough for basic required school supplies or sensible and budget friendly shoes —their needs. If they wanted more extravagant clothes or supplies, they’d pay for the extra. It’s amazing how unimportant a designer pair of shoes became when kids had to work or save for it.

We also used school lunches to train. At the beginning of the week, or beginning of month as they became more responsible we gave them a lump sum for the basic school lunch. We also had plenty of supplies at home, so they could pack instead and save their money. Vacations were another training opportunity. They’d get a lump sum on Day 1 to use however they wished. It was interesting to see how differently they’d approach it. One kid might blow it at Cracker Barrel on the remote control rodent before we were out of the state while another would come home with money still in their pocket.

Here are some things we found helpful as we worked to train our kids.

• Tithe comes out first. We weren’t always great about this, but with five kids, we got better with the younger ones. Whether the money comes as a gift, allowance or payment for work, the tithe is the first to be set aside. Everything we have comes from God, and he instructs us in many places in the Bible to bring 10% to him. So we do. A common way to divide up the rest of the money is a save and spend portion. A simple way to do this is put the money into three envelopes: tithe, save and spend.
• Let them fail. When we give kids freedom, they may make poor choices. I believe poor choices as a 1st grader will help them make wiser choices as a high school student. If they choose to spend their money foolishly, don’t bail them out. Looking back on my life, I’ve learned much more from failures than success. The same is true with our kids.
• Be empathetic. If we allow our kids to make mistakes it may feel good in the moment to throw out the “I told you so” card. But don’t. Instead of being snarky, empathize. Try somethink like: I’m sure it is disappointing to miss out on a football game with your friends (you can leave out “because you spent all your money on the video game even though I told you that was a dumb idea.”) Use this as an opportunity to give them space to talk about what they may have learned.
• Help them discern wants vs. needs. Wants and needs are confusing. Kids, teens, and even adults need help in understanding the difference. As parents we’re responsible for providing for their needs (clothes) but are not responsible for their wants (designer clothes). Give your kids opportunities to earn money to pay for the wants and in the process often the wants become less important or not worth the extra effort.
• Do what works for you on allowances and paying for chores. There are many differing opinions on the best way to give kids allowances or paying them for chores. Choose a method that works for your family and is sustainable. The goal is to give your kids the opportunity to make financial choices and learn to manage and budget their money. For younger kids, instead of money you can use tokens that can be earned for particular behaviors, then cashed in for extra screen time, a solo trip to the library, or something else that will motivate your child.
• Be strong. I sometimes have to remind myself to look at the long game instead of the red-faced screaming kid in front of me. By giving our kids what they want every time they whine or have a fit, we’re training them that whining and tantrums are effective ways to get that candy at the checkout line or the toy at Target. With older kids, their wants may be tied to status, fitting in, and belonging. It’s a great opportunity to teach them that their identity is tied to who they are and what God says about them (He thinks they are a treasure) not what they wear. When we give in to our kids regularly, wants becomes expected rather than extra which feeds a spirit of entitlement, which is unattractive as a preschooler and can be debilitating as a young adult.

After the “charge it” convo with Rachel, we were more intentional. Rachel even recalls a time in high school that her credit card was taken away because she wasn’t able to answer her dad’s questions, “What’s the price per gallon of gasoline?” Because she didn’t know, couldn’t even get to within a dollar, Mark said she obviously wasn’t aware of what she was spending or aware of the savings available by shopping around for gas. Now many years later, she said she knows where to get the best deal on gas. And she’s training her kids to understand the value of money and the blessings that come from giving to others.

Kids who are generous focus more on the needs of others than their own desires. As parents, teaching our kids the value of money and providing opportunities for them to experience the joys of working hard and blessing others will enrich our kids’ lives and the lives of those around them.