Teaching Our Children to Handle Money

Our children are one of the most important resources God has given us to steward and we shouldn’t take the responsibility of raising them lightly.  We’re told in Ephesians 6:4 to “bring them up in the discipline and instruction of the Lord.”  While every day brings with it a myriad of teaching moments in our homes, the foundational beliefs we create through the way we make financial decisions should not be ignored.  The lessons learned in these moments not only prepare them to be responsible adults and stewards of what God will entrust to them someday, but also help them build a framework to understand some basic truths about God.

Since our children may not be Christians for many of the years they live under our roof, it’s important to understand that they may not be motivated to action out of obedience to Christ.  However, just as we want to serve our Heavenly Father, they also have a desire to please us through obedience.  While this isn’t the motivation we ultimately want to drive them, it can still serve as a motivation to do the right thing and develop the habits that will help them be a better Christian when that day comes.

It would be impossible to put together a list that covers all lessons and situations, so here is a list of things that I hope will be helpful as you embark on this endeavor:

Lead by example – The most common excuse I get from individuals who are struggling financially is that their parents weren’t good with money or didn’t teach them how to handle it.  These two things are related in that our children learn by watching us.  If our life is characterized by foolish financial decisions, our children will almost certainly follow our lead regardless of what we tell them to do.  If your house is not in order and you’re struggling financially, get help immediately so you can set a good example for your children.  Don’t be afraid to point out your mistakes as you go through the process of fixing them.  Everything is a learning opportunity.  The beauty of the process is that it not only helps you, but will likely change their financial situation for life.

Show them money’s proper position – Money is a tool and should never be considered the most important thing in life.  Our service to the Lord will always come first.  While we strive for success, we don’t do so at the cost of our beliefs or our relationships.  Again, the way you conduct yourself in life will speak louder than your words.

Don’t be afraid to say “no” – We all have a greater appreciation for the things that didn’t come easy in life.  For that reason, a child who gets everything they want will never really appreciate anything.  That’s part of the reason why spoiled children often display bad social behavior.  The term “affluenza” has been used to describe the sickness of growing up with wealth and never being denied.  Surprisingly, it is often characterized by many of the same symptoms of the very poor including low self-esteem and depression.  The irony of affluenza is that the belief that happiness comes through material things ultimately leads to depression and sadness.

Let them make spending decisions and suffer the consequences of poor choices – As little sinners, our children will ultimately act on impulse and make some foolish choices when given the opportunity to spend their own money.  While we often should tell them “no”, we sometimes need to let them make spending decisions and then observe what happens.  It’s natural to want to protect them from mistakes, but sometimes a skinned knee is the best teacher.  The value of the lesson learned at a young age is often worth way more than the financial cost.  Just remember, the older they get, the more those lessons are going to cost.

Teach them about opportunity costs – Money is not unlimited.  It’s important that we all understand how one purchasing decision will affect our ability to buy other things in the future.  If your child decides to spend all their money on an expensive pair of shoes, don’t give them more money when they realize they can’t afford the shirt and pants to go with them.  They need to realize there are consequences to bad decisions and you aren’t there to bankroll their poor choices.

Teach them the value of work – Work is a blessing from God and our children need to understand the connection between it and money.  I don’t have a problem with giving kids a small allowance, regardless of work.  However, we need to look for opportunities to connect the dots between work and money in their minds.  For example, if your child would like to buy something they don’t have enough money to purchase, you can provide them with a list of jobs you will pay them to perform.  Looking for work to earn more money is the same response we would expect of adults in a similar circumstance.

Keep it real – We need to help our children understand the economics of the real world so they’re prepared when they go out in it.  It doesn’t serve them well when we have them living in an environment that doesn’t reflect reality.  For example, I’ve seen parents offer their children unreasonable amounts of money to perform simple tasks around the house so they can “be a blessing to them”.  You could argue they’re really just cursing them in the long run.  What is your child going to think when they’re used to getting $100 from you to mow the yard, but every neighbor is only willing to pay them $20.  It won’t be long until they only mow your yard because they don’t think the others are worth the work.  Paying them more than they’re worth only gives them a false perspective of money that will ultimately leave them disappointed when they enter the real world.

Avoid giving the blank check – It’s not uncommon for children to be given an unlimited budget when it comes to certain major life occasions.  Some of the most common examples that come to mind are birthday parties, formal dances and of course, weddings.  Are there any good lessons that can be learned when we turn them loose to spend with little or no accountability?  This situation usually ends with overindulgence and irresponsible spending decisions.  Instead of trying to make wise decisions, they’re more concerned with figuring out just how far they can push it without getting in trouble.

Teach them generosity – The attitude you model for them will be key.  If you’re stingy in your decision making, it will override anything else you tell them.  On the other hand, a home that is characterized by generosity and hospitality will serve as a visual lesson of Philippians 2:3-4 – “Do nothing from selfish ambition or conceit, but in humility count others more significant than yourselves.  Let each of you look not only to his own interests, but also to the interests of others.”

When it comes to giving money to church, your children may not fully understand or appreciate the concept of giving at the time, but it is something we should require of them.  Giving is a discipline that needs to be learned from the first dollar earned.  Even John D. Rockefeller said “I never would have been able to tithe the first million dollars I ever made if I had not tithed my first salary, which was $1.50 per week.”  Even Christians struggle to give generously when their income is large if they never developed the discipline of giving when the dollar amounts were much smaller.

Note:  One surprising struggle for parents is the child that wants to give away more than we expect.  I’ve personally struggled with this as my children decide to give a big chunk of their savings to a cause they’re excited about.  This seems to happen every year they take an offering during Summer Bible School.  Unfortunately, my initial reaction was to talk them down from that decision, but then I realized the terrible lesson that would teach them.  If they want to give everything they have to God, who am I to stifle that generosity?

Teach them contentment – Contentment can only be learned when there are things we want, but don’t have.  Solomon taught us the futility of finding happiness through indulgence.  He spent his life fulfilling every desire only to conclude that it was all done in vain.  If anything, material things and contentment are at odds with each other.  Studies show that once basic necessities are met, having more stuff doesn’t make a person happier.  Paul writes in 1 Timothy 6:6 that “godliness with contentment is great gain”.  Note that he didn’t write that godliness with great gain is contentment.

Teach them thankfulness – Thankfulness doesn’t come naturally to any of us.  It is a discipline that has to be learned through practice.  We should lead by example in the way we treat others, the way we talk, the way we react to life situations, and in the way we pray.  Words like please and thank you are simple ways to demonstrate thankfulness and appreciation.  We should say those words often and require them from our children as well.

Conclusion

Statistics show that most parents would rather talk to their kids about drugs and sex than about money.  Let’s face it, most parents are uncomfortable with the topic themselves.  The solution starts with getting our own house in order and understanding what scripture teaches on the topic of money.  As we learn and make wise decisions, we will be serving as a model of good stewardship to our children and teaching them life lessons they’ll never forget.  The best part is that these financial lessons aren’t just about dollars and cents.  When done from a biblical motivation, our financial decisions can reflect the truths of scripture and teach our children important lessons about God as well.

Brad Graber, CFP® has been working with clients on personal financial planning and investment issues since 1996.  He invests his time mentoring and educating individuals on ways to be better stewards of the resources God has entrusted to them.