One of the greatest gifts we can give our children besides raising them with a spiritual and moral foundation, strong character, and sense of purpose beyond themselves is an understanding of good financial management. Carefully managing the resources with which we are blessed frees us from financial stress and allows us to dedicate our energies to improving our world and helping others.
Most of our population live in debt and pay vast amounts of money in interest to banks, credit card companies, and car loan sharks. All this interest is money that, if invested, compounds to be hundreds, thousands, hundreds of thousands, even millions of dollars over time. Debt and money problems can create tremendous stress both in individuals and in relationships. Our financial goal for our children was to teach them to control their money and have it work for them instead of letting money control them.
Understanding consumerism, intentional spending, savings, debt, credit scores, investments, and the wonder of compound interest were central to the instruction our children received beginning at an early age all the way through teenage years.
GOALS for Teaching Financial Responsibility:
Our goals were simple and straightforward:
1) Raise children to have solid financial management skills including knowledge of banking, credit, loans, and investments, and to have them leave home with a checking and savings account, debit card, “convenience” card (AKA credit card), and a basic investment portfolio with competence managing each.
2) Raise children to appreciate and embrace a financially responsible mentality including:
-
-
- value hard work to earn money you need to live, hopefully doing what you love,
-
-
-
- live within your means (i.e., spend less than you make) and avoid debt,
-
-
-
- be intentional and deliberate about all purchases, big and small, and avoid wasteful spending,
-
-
-
- save all you can now, so you have money for what you need later, and
-
-
-
- invest wisely and create passive income.
-
3) Raise children to maintain a healthy perspective on money, seeing it as a useful economic medium, but not a “god” that dictates life choices and happiness. We see money as a blessing from God entrusted to us to use prudently, invest wisely, and share generously.
Along with these financial goals, we emphasized a strong work ethic and thankful attitude. Our children were taught to work hard to earn money and save for things they need and want; they are not entitled to anyone else’s hard-earned money and no one else is responsible for any poor financial choices they might make. If anyone does offer gifts or assistance, humbly accept with a grateful heart.
METHOD for Teaching Financial Responsibility:
So how did we go about accomplishing these goals?
We incrementally provided our children with opportunities to gain this knowledge and these skills with careful instruction, monitoring, and oversight from a very early age all the way through teenage years.
Starting at an early age, we gave our children small amounts of money to manage with careful instruction and oversight. As they grew older, the amount of money to manage and opportunities to earn money increased. During the teen years, they read a number of financial management books to educate themselves. Between ages 16 and 18, they were mentored in managing a job, a checking account, a savings account, index fund investments, and a “convenience” (credit) and debit card.
Transitioning to adulthood, our children, now adults, leave home equipped with the tools and skills to competently manage their finances and make wise and informed financial decisions. 6
The links below provide details on how we taught financial responsibility at each stage of their life:
The Elementary Years (ages 5-9)
The Preteen Years (ages 10-12)
The Early Teen Years (ages 13-15)