Parents have the awesome opportunity and privilege of educating and discipling their children in all matters of life. One area often overlooked is teaching children how to handle money responsibly. To be fair, some parents have conversations about money, but most are reluctant to teach good money habits and financial education. Why? Perhaps it is because they simply don’t think about it, don’t feel they have adequate knowledge, or struggle to handle money themselves.
Parents must remember their kids are watching them and will form behaviors and attitudes about finances based upon those observations, even if you never say a word. We do not do our children any favors by neglecting to teach them about money. By making this a priority early on, parents can help their children avoid major money mistakes in the future.
The early years are the best time to start teaching kids about handling money. A study by Dr. David Whitebread and Dr. Sue Bingham at University of Cambridge revealed that children form money habits by age seven. Teaching children about money from a young age equips them with skills to navigate the financial world confidently. By introducing practical lessons early, parents can help kids build healthy money habits that last a lifetime.
The best place for parents to start teaching their kids about money involves basic stewardship lessons: earning money, the power of giving, spending wisely, and saving for goals.
Earning Money. It is okay to give your children money, but don’t give them money for everything. Teaching kids money
is earned helps them appreciate its value. Consider two suggestions: 1) assign chores and pay them for their work;
2) allow them to be an entrepreneur and come up with new jobs beyond their normal chores and pay them for those. Who says work can’t be fun?
The Power of Giving. One of our greatest privileges as Christians is giving back to God. Parents not only need to model giving, but they also need to teach the importance of generosity. Do this by encouraging kids to set aside a portion of their money (allowance, earnings) for charitable giving. Each time you pay them, help them set aside money in a jar or envelope to give at church or to a missionary. Let them give the money, so they will experience the joy of generosity.
Spending Wisely. Kid’s love to spend money like everyone else. Let them. Help them set aside a certain percentage of the money they earn to spend on something they want. At the same time, help kids distinguish between needs and wants, the value of things, and how to set up a budget.
Saving for goals. Children need to understand the concept of saving. As they earn money or get money, help them put away a portion for savings either in a jar, envelope, or savings account. This will teach them to save regularly. Encourage them to save for a particular goal like a toy or gadget they want. Once they reach the goal, celebrate by taking them to the store and letting them purchase the item. As they get older, help them set bigger savings goals like a car or college funding. Begin to teach them about compounding interest and other types of investments.
Our goal should be to keep kids from entering adulthood with no idea of how to handle finances wisely. Before long, our kids turned adults will begin making important financial decisions that will affect the rest of their lives.
Teaching kids about money doesn’t have to be complicated. By incorporating simple, practical lessons into everyday life, parents can lay the groundwork for financial literacy. These early lessons will empower children to make informed financial decisions as they grow, setting them up for a secure and successful future.
About the Writer: Chris Compton is CFO for Richland Ave Financial. He graduated in 2007 with an M.A. in Bible Exposition from Columbia International University. A 1998 graduate of East Tennessee State University, he has over two decades of administrative and financial experience in varied fields, along with seven years in pastoral ministry.
