How do I develop good concepts of money with my child?

What guidance does the Bible provide?

The story of creation in Genesis 1 reminds us that God owns everything. He created us for a purpose and wants us to wisely use all His gifts to us. All throughout Scripture we see God’s provision and generosity to us. He sets the example for us to live a lifetime of generosity to others with our finances, as well as our time and energy.In Proverbs 3:9, God also established a pattern of giving for us as a sign of honor and worship to Him: “Honor the Lord with your wealth, with the firstfruits of all your crops.” Matthew 6:21 says, “For wherever your treasure is, there will your heart be also.” Giving generously to God reminds us that everything we have is a gift from Him.

Things to think about:

Helping your child establish good money habits is one of life’s most important lessons. There are hundreds of ways to equip kids in the area of stewardship, but deciding on your approach first can be helpful to the process. Think about these questions:

  • At what age do I start teaching my child about money?
  • Do I give an allowance?
  • If so, how often?
  • How much is appropriate?
  • Do I require my child to save or give?
  • Do I put limits on what my child can use the money for?
  • Do I require chores to be done in exchange for an allowance?
  • Do I remind them and if so, how much?
  • It seems simple until you begin trying to unravel the concept of money with your child. Defining these parameters will give you direction in teaching your child.

There are several important lessons you will want to help your child learn at an early age:

  • Sometimes we have to wait to get what we want. This concept will apply to any age; establishing early that delayed gratification is okay sets up a lifestyle for later years and bigger purchases. Helping your child learn early that waiting and saving to buy something they want helps them learn to define what is important to them.
  • Sometimes we have to make choices. Learning early that money has limits will help your child learn to make wise choices. Giving your child a few dollars and walking them through the buying process at the grocery store will set a pattern for making sound financial choices later in life.
  • Saving now pays off later. We live in an “I want it now” world. Helping your child save today, even small amounts, allows them to watch it grow, resulting in their ability to buy something better in the future. For example, they could buy a small toy today that will probably break quickly. Or they could save, setting a goal to buy something like an iPad in the future.
  • Credit cards are for convenience, not for charging! Credit cards are an easy way to get what we want today, but can easily result in huge debts that are difficult to pay off and ruin our credit rating for future buying. Teach your child the responsible use of a credit card. Set them up for the future when they will be establishing their own credit.

What do I do now?

Once you have answered the questions about “how” to prepare your child, begin by practicing these concepts in your own finances. You are your child’s best lesson in money management. Teach them to connect money in three areas: saving, spending, and giving. The website “Money as you grow” gives suggested milestones for appropriate ages with activities to help your child apply these concepts. The suggested websites below will give you great ideas to help your child learn in practical ways to learn about saving, making choices and avoiding debt. A great activity for helping your child visualize money concept is to set up 3 jars, labeled “saving,” “spending,” and “sharing.” Every time your child receives money, whether from an allowance or gift, have them divide the money into these jars. (The easiest way to divide the money is equally into thirds; parents need to agree ahead of time if different ratios are important to you.) Guide your child as he uses the money: the “saving” jar is for longer-term goals of buying something special. The “spending” jar is for small purchases like candy or toys. The “sharing” jar is used for someone who is in need or to your church.

Want to go deeper?

20 Things Kids Need to Know to Live Financially Smart Lives: this article breaks down by age group money concepts and activities to reinforce good money values.MoneyAsYouGrow.orgModern Parenting: Sing It With Me Friends: Money Mondays: practical ideas for teaching your children financial independence and making wise choices.Lets Lasso the MoonJunior’s Adventures Bible StudiesFinancial Peace Junior: a 6-lesson Bible study series that teaches kids how to handle money God’s ways.Dave Ramsey Right Now Video:Parenting section“Raising Financially Freed-up Kids”: proven and practical ways to take decisive action in raising children who will be responsible and God-honoring with their finances.