Cultivating the Next Generation of Stewards
One of the main questions I get asked about is how to teach kids about money. Most parents don't actually teach kids about money, and the ones who do typically do so in unhealthy ways. So, today I'll be sharing the way I recommend teaching it. First, I'll share a few key principles that I believe are essential:
There are only three things we can do with money: spend, save, and give. All are equally important.
Don’t give an allowance. Allowances teach kids entitlement. Instead, kids should be expected to do basic chores because that's what we do in our family: We serve each other and contribute.
Aside from the normal chores, offer special projects that allow kids to take initiative, do good work, and be compensated for said work. This practice helps connect work, money, and the value of a dollar.
It's critical to let our kids fail. They are either going to fail under our roof where we can help them navigate it, or we can protect them for 18 years, just for them to fail bigger (and without our presence) when they are adults. I repeatedly allow my kids to experience buyer's remorse, regret, and lack of resources to buy things. These are fantastic (and critical lessons) for our kids to learn.
If you're a Christian, it's important to teach kids that money is not ours to begin with. Rather, it's His, and our job is to manage it well.
I typically view this kids-and-money topic as three stages:
Stage 1 - Age 2-6: During this stage, we're just trying to teach kids what money is and how it works. This is typically done through spending and giving. We can bless others through generosity, and we can use it to buy toys. I split the money 50/50 between the two categories. It's done very simply and at a higher level. Piggy banks are usually the tool of choice.
Stage 2 - Age 7-11: During this stage, we're trying to connect the dots between work and money by allowing the kids the opportunity to work in exchange for compensation. This is also the stage where saving for a larger purchase is introduced (delayed gratification!). Whenever I pay the kids for projects, I do so in multiples of three: $3, $6, $9, $12, $15, etc. That way, the kids can allocate 33% for spending, 33% for saving (on a larger item they select), and 33% for giving. My kids use wallets for spending, and separate zip-lock bags for saving and giving.
Stage 3 - Age 12+: During this stage, we teach kids about banking. We use the same principles as above, but at this level, we introduce checking and savings accounts. This is also the stage where they will probably seek outside work opportunities.
There’s definitely more to unpack in the future, but hopefully, this quick summary helps! I know a lot of you are trying to work through these dynamics. You got this, parents!