Start Them Young

At some point in our lives, we all reach a point where we have to manage money. Although some of us may have an earlier start than others -whether it be through allowance, jobs, or otherwise – most of us typically reach this point when we are of age to hold our first job. Even though it will only be part-time work with minimum-wage, it will still be our own hard-earned money. So, what do we do with it?

Well, if you were anything like me, you probably spent it. On anything important? Nope. On clothes, fast food, video games… Then when I went to college, it was books, school supplies, and things of that nature. For other people, it may be other frivolous things like jewelry, exotic trips, beauty supplies, fast cars, etc. Still, for others, they may have had to help their families make ends meet by paying the bills. Regardless of the circumstances, when we had our first jobs, we didn’t know how to manage our money and ended up spending most of it rather than saving it. Overall,  we were young, naive, and made poor choices. But, does it have to be this way?

What could have happened if someone had taught you how to manage money at a young age? 

What if someone had taught me how to save my money for the things I wanted, rather than letting my newly minted money burn a hole in my pocket? My money managing skills may be much different today if I had learned these skills at a young age rather than as an adult. I am now retraining YEARS of bad behavior to develop healthy spending habits, in order to have a strong budget and financial strength.

It doesn’t have to be this way. What if we taught our children about saving money and spending money in a positive way, just like we are teaching ourselves? Instead of giving them an allowance, telling them to save it for their favorite toy and hoping they abstain from buying a candy bar today, we should teach them about spending, saving and giving. Show them they can spend a little of their money, save a little of their money for that big toy they want, and give a little away too.

But what does this look like? HOW do we teach them this?

Start them early.

Don’t pick a set age and start then. Start NOW. Even if your child is a toddler – start teaching them about the value of money, and that it is earned and not given freely.  Explain to them their toys and things are the same way. If you have teens, it’s not too late for them either. When they ask for money for the movies, have them do something in exchange for it. Simple chores are great for this, like doing the dishes, cleaning the backyard, etc. Teach kids that their money has value and the perceived value with it being earned is so much greater.

Show them, don’t tell them.

Show them what savings means. For younger children, that means a visual savings account. To visualize savings when I was younger, my parents gave me a savings jar, and we drew a picture of what we were saving for. As I got older, that meant an empty peanut butter jar with a picture of the car I wanted to buy and the written dollar amount of the down payment. We as human beings are visual by nature. When your children see what they are saving for, they will understand what it means they are working towards.

Budgeting 101

Give them a basic budget, budgeting 101. The foundational budget comes from a Biblical standpoint. The one we follow is this: 10% towards giving, 10% towards saving, and the rest towards spending. Whatever the income is, this is the basic starting point.  If the allowance is $10 a month, $1 is saved, $1 is donated, and the rest can be spent. If they are saving for something big, like a video game or a console, you could encourage them to save more. But always remind them that they are to never save less. Remind them there is freedom in a budget! The remaining $8 is meant to be spent! They have freedom within their budget to buy a toy or coloring book if they want to, as long as they already set aside their savings and donation.

Banking

As they get older, it is important to teach them about banking. Help them set up their first savings account. Encourage them to contribute to it. Help them set up their first checking account when they get their first job. When they turn 18, teach them about credit. If they are ready, help them get a credit card.  Tell them how banks work, how to make deposits, obtain loans, and get a mortgage. Make sure they know how to make their loan payments, how to write checks, etc.

Most importantly, we want to teach children to use money wisely. We want to encourage them to be better off than we were and to have a better life than we did. If we have the skills to be financially secure, we should pass those onto the next generation. We are going to live financially free, let’s encourage our children to do the same. When we live with a budget, it’s easy to live debt free. Give your kids that same gift.