It’s no fun feeling poor. Most of us have had a time or two (or more), when money has been tight. Some of us had great role models in our parents about how to successfully manage our money. Some of our parents may have shown us what not to do. Lots of adults are walking around still feeling like they haven’t really learned the best way to handle finances. That was true for us, even in our late twenties and after we had our first child. Financial Peace University is what helped us to get on track, and the emphasis it places on Biblical principles was a huge attraction for us. I wrote a post that you can find here if you would like to hear more about our story.
Even if a parent feels like they have the whole money thing figured out, they may struggle with how to talk to their kids about it. Since we loved Financial Peace University so much, we have looked into the kids’ version. It’s based on the same principles as the adult FPU class, but tailored for kids 3-12. You can find more info about it here.
There are other great ways to teach your kids about money using practical examples that will stick with them. One parent I know has three jars on each of her children’s dressers. One is labeled “Give,” one is “Save,” and the other is “Spend.” Every week when they get their allowance (which they earn by completing different age-appropriate chores), they get to “pay their jars.” She has them put 10% in the “Give” jar to remind them that giving back is the most important. They can use this money to give back at church, charity, or a community cause. Next, they pay their “Save” jar. This is 20% of their allowance. By putting this jar second, it reminds them that first we need to make sure we are saving before we spend. Finally, they get to pay their “Spend” jar. This gets the final 70% of their allowance. This is where they get to buy small items like candy at the store, a book, or a small toy. Larger purchases that they need to save for, can be written on a post-it with the amount that they need to save and stuck to the “save” jar. Overall she reports that this system works well and is really reinforcing important principles of money management for her kids.
I came across another great example of how to teach your kids about money and budgeting when I was reading a finance article in yahoo earlier this week. One commenter on the article had a fantastic idea and suggested doing the following:
When your kid is about 9-10, get your entire month’s pay in $1.00 bills. Put this stack of money on the kitchen table in front of the kid and watch as they marvel about how rich you are. Then, count out the mortgage/rent into its own stack. Groceries. Cable. Car payment. Insurance payment. Savings (this is very important). All the monthly expenses in their own piles. If you have any yearly/quarterly expenses, prorate them for one month. Then, let the kid see what is left for things like birthday presents, vacations, movies, etc. This is a lesson that will stick with them for the rest of their lives.
(You can find the original article and comment here.)
There are lots of great resources out there, but I think the most important thing is to keep lines of communication open. Pay bills in front of your kids. Explain what you are doing. Don’t be afraid to tell them that you can’t afford to do or buy something. Let them count out the cash to pay the cashier at the store or restaurant. Giving them a chance to save up their own money to buy something is an invaluable lesson. What are some lessons you learned about money as a child? What are some areas you are still struggling with?