Teaching Money Management
I want my kids to learn money management now, while they’re still under our roof, where poor financial decisions are far less disastrous.
The Proverbs 31 woman set a great example in managing money (as well as a whole bunch of other things!) “The heart of her husband trusts in her, and he will not lack anything good“; if she had squandered the family’s hard-earned money, this would not be so. She must’ve been smart in how she spent money because she had enough to buy and plant a vineyard, make profitable business deals, had no fear of keeping her family clothed and fed, and she was still able to extend a helping hand to the poor! Whew!
So, how do we teach this to our kids?
With Kathryn, the first way we started teaching managing money was with jars labeled: “GIVE“, “SAVE“, and “SPEND.” This was for any money earned or received as gifts. The first money (minimum of 10 percent) goes in the GIVE jar. Our suggestion was half of the remaining money in SAVE and half in SPEND, but we allowed her to choose. She could choose to move money from SPEND to SAVE, or from SAVE to GIVE, but never in the other order.
Ten-year-old Kathryn is a saver, and she has quite a sizable savings account for her age. We have recently given her access to view her account online as another first step towards managing her money. We are still in control of the account, and what she can do is very limited. But it makes her feel important and encourages her to continue her habits of saving.
Sixteen-year-old Lindsey, on the other hand, is a spender. If there is money in her pocket, it disappears — fast! This could become a big problem a few years down the road if we don’t help her learn now. Earlier this year, we gave her a prepaid card; she uses this like a debit card but she cannot overspend, so there is no worry of overdrafts or added fees. We set the amount on the card, and she can log on to an account online to see where that money is going. This way, she will begin to realize that she really did spend $30 on Starbucks last month, whereas if she pays in cash, she won’t remember that.
The money on this card is not an allowance or extra money; this is the amount we have budgeted for her part of our family’s clothing and personal care budget — but now it’s her responsibility. We have spelled out exactly what she is now responsible for: clothes, shoes, hair products, toiletries, jewelry, etc. If she blows this money on Frappucinos, she may not have money for deodorant — but we won’t bail her out, and she’ll learn! We started this for three months at a time, but she was spending it far too quickly, so for now, it’s monthly. At some point, once she is managing her budget well, we’d like to stretch this out to six months or a year, which will require even more self-control and responsible budgeting on her part!
Oh! An important caveat on Lindsey’s spending: though she’s responsible for buying her clothes, they must still pass the Dad-approval test for modesty or they go back to the store!
With Brandon, we didn’t have as much opportunity to teach these things in an everyday sort of way (since he lived most of the time with his mom and stepdad), but we did discuss them. He’s already said he’ll be talking to me when it’s time to buy a house because I’ve done it so doggone many time, so I hope that means he might listen to us about other finance-related things, too.
There’s just so much to do in this journey called parenting, isn’t there!?!