I read an article in the newspaper entitled, "5 Crucial Tips for Raising Money-Smart Kids," by Jean Chatzky. I found the article very interesting because money interests me and teaching my kids about money interests me. I relate to her statement, "we don't want our kids to make the same mistakes we did."
I have been working since I was probably 10 or 11 and I can't help thinking how much money I wasted. My family moved from Canada shortly after I turned twelve and I remember in Canada having a savings account and my own debit card for my checking account. It must have been a joint account with my dad. I remember going into the bank with him and filling out paperwork. Money from my paper route was deposited automatically into my checking account. I had a lot of discretionary income for a young child and not much discretion. I remember wanting to buy a whole series of books, totaling around $300 if I remember correctly -- books I would have ended up throwing out if I still had them today. I did pay for my first year of college but most of that was saved in the year before college. What happened to the money I made my other teenage years?
Chatzky suggests giving children money to manage, perhaps with an allowance, to help them understand the real cost of items in the real world. She then gives them a list of the types of purchases that will be their responsibility. If you are going to give children your money, I definitely like the idea of giving them a list of the types of things you will not be buying for them anymore. Giving a child an allowance on a regular basis to spend on their own pleasures, I cannot see developing any type of responsibility. It seems that would teach children that money is easy to come by -- that it does not require hard work and sacrifice.
I remember when I was growing up my Grandpa was talking about how we need to relate the money we would spend on a new shirt or an evening out to the time we worked to earn it. If the shirt costs me $20, would I work 4 hours for it? Would it still be worth it?
Also, money that you give a child is not money that is earned. The family has not become wealthier, it has just reallocated its resources. Chatzky states that even her children agree that the money she gives them is a lot different than the money they earn. It holds more value. It is theirs. It is their labor and frustration and reward.
We have had many conversations about how our boys could make money. Their creativity is amazing. Recently my seven year old son set up a stand to sell drinks and snacks. He made $10, but me being the realist that I am, (some may call it dream-crushing) I explained to him how he didn't actually make anything because he had to pay Dad back for his supplies. I hope I didn't discourage his desire to try, but it doesn't seem that I did. Businesses are hard to start. Snacks and drinks may not be a bad idea, but what about location? He decided he should set up a stand at the end of his uncle's driveway and sell pop to his uncle, who drinks more pop than anyone else he knows. He may have just learned an important lesson about marketing.
Jean Chatzky advises parents to motivate their children to save. She has found a dollar-for-dollar match to be effective. Sometimes it is not possible to put aside money for our children, even if we would like too, but we can definitely teach them to save their own money responsibly. We tell our boys to separate any money they get into four even portions. Then they give away one pile. I let them decide where they would like to help. We talk about the needs around the world and in our town or our church. My two older boys have read through Randy Alcorn's, Treasure Principle, which is a book I highly recommend. I want them to learn to store up treasure in heaven, to invest in the things that matter to God.
One pile is theirs for spending. I tell them this pile is for any thing they would like to buy for themselves or as they get older, it could be for monthly living expenses.
The last two portions are for saving. I try to keep the future in front of them. For example, even though they are years away from having a license to drive, we talk about their older cousin who is about to drive. I encourage them to ask him if he plans to buy a vehicle and I tell them some day if they keep saving they will be able to buy their own vehicle. We talk about people they know who are in college and how they can go to college too with the savings they are working on now. We talk about buying computers and some day houses.
We do need to be wise with our money, but also realize that it is God who gives the power to get wealth. It's amazing how hard and long we can work on saving only to have something unexpected come up that uses all of what we have saved. Our money can never be our security.
I hope our children can learn without making the same mistakes we did. I also hope they will grow in faith that we serve a God who is bigger than our money.
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