Teach Finances to Your Kids

It’s your responsibility to teach finances to your kids.

Teach Finances to Your KidsI grew up as a pastor’s kid. Here’s what I learned about finances:

  • Taxes made dad angry and mean
  • Money problems made my parents yell at each other
  • Being a pastor didn’t pay very well
  • Dad emptied my passbook savings to pay our bills
  • Grandma bought us what we wanted and needed

As I grew older, I learned that:

  • Dad was secretive and controlling with finances
  • We hadn’t given tithes and offerings in years
  • We weren’t paying taxes the last few years before dad filed for bankruptcy
  • Dad had opted out of Social Security and was not saving toward retirement
  • The money was being spent on dad’s porn habit

I grew up with no real intentional education about biblical stewardship, saving, investing, paying bills, debt, or doing taxes. I did have one pretty awesome entrepreneurship experience selling homemade cupcakes to construction workers, but that’s probably a different post.

Now that I’m a pastor, I’ve learned that I could easily make the same mistakes. And for a long time, we were living beyond our means, I was neglecting tax planning, and I found myself resenting the pastoral call… “Why couldn’t God have called me to a job that made decent money?

Once we became intentional about paying off our debts, understanding our taxes, having an emergency fund, and investing and saving for the future, I found that my attitude became better. I enjoy pastoring more now that my finances are under control! (Thanks, Dave Ramsey!) Click To Tweet

Not only have I become passionate about empowering other pastors toward financial wholeness, I’ve also become a little fanatical about teaching finances to my son.

Here’s what we’ve done. It may not be exactly what you would do. But I hope this list helps you to think about how you can be intentional and teach finances to your kids.

Ages 3-6

Allowance and Commission

Very early on, we decided to give Nathaniel money on a regular basis. We gave him an allowance for the express purpose of teaching him how to put the money regularly into his Giving, Saving, Spending Bank.

We did not pay Nathaniel commission. Commission is paying your child for the chores they do. This can be very useful for creating a work=money link in the brain. But it can also teach a child not to contribute to the household unless there is an economic benefit.

I don’t think we made a conscious decision NOT to pay for chores, we just didn’t do it.

At any rate, we paid an allowance and helped Nathaniel divide it into three parts: Giving, Saving, Spending.

Giving, Saving, Spending Bank

Teach Finances to Your KidsWhen Nathaniel was about 4 years old, we bought him “My Giving Bank” by Larry Burkett. This bank is divided into three separate compartments: 1. A Bank (for saving), 2. A Store (for spending), and 3. A Church (for giving).

We would give him $3 and help him put one in the bank, one in the store, and one in the church.

Every week when we went shopping, he would bring the money from the store and try to spend it.

Every week when we went to church, he would empty the money from the church and give it as offering.

And the money in the bank just sat there growing and growing, saving up for something at a later date.

When Nathaniel would get more money ($20 as a gift, for instance), we would help him put at least 10% into church, at least 10% into the bank, and the rest into the store. Sometimes he would want to put more in the church or the bank. And that was okay, as long as he had his reasons.

As he grew older, we increased his allowance and he would establish savings goals and learn to differentiate between tithes and offerings. But this was a great way to start things out.

The Moonjar Moneybox and Money Savvy Pig do the same thing.

Ages 6-8

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A Little Inflation

inflation purchasing powerLast week news came out that the United States experienced 1.4% inflation over the last 12 months. Economists say that’s an indicator that the economy is growing and healthy. In fact, the Federal Reserve tries to create an economy with roughly 2% inflation per year.

Practically, this means is that our dollar buys less today than it did a year ago.

1.4% inflation means that if something cost you a dollar last year, it will cost you roughly $1.01 today. Prices are going up and your purchasing power is going down.

1.4% inflation is not much. And there’s a tendency to look at a number like that and know that’s just the way things are. But year after year, inflationary pressures are real and significant!

My question is this: Did you get at least a 1.4% raise last year? If you didn’t get some kind of cost of living adjustment or raise, you’re actually losing ground. You’re actually getting paid less this year in purchasing power than you were paid last year. A stagnated salary is not neutral. It’s negative.

Churches have a tendency NOT to revisit salaries. In fact, most pastors are getting about the same pay they were getting 5-10 years ago.

1.4% is a tiny pay raise. In fact, with an average $50,000 salary, you’d be earning just $700 more for the whole year. That’s less than $60 extra per month in your paycheck. But you probably can’t afford to be going backwards with your purchasing power year after year after year. It’s one of many reasons pastors feel the long-term squeeze in their pocketbooks.

If it’s been a while since you’ve received a pay raise, you’re going to have to become proactive. You’re going to have to ask for one. There are many things that make salary negotiation uncomfortable for pastors. But it’s easier if you have a standing committee that meets regularly to discuss your salary.

If you need a raise, but don’t know how to start negotiating, sign up for a FREE 30-minute one-on-one strategy session to figure out your next steps

June’s spending plan almost broke our brains.

Each month’s spending plan is unique. This month’s spending plan is VERY unique!

During the school year, our plan can (more or less) stay about the same. Our general planning model is this: pay all of our necessary expenses, plan a few discretionary expenses, and anything left over gets dumped on old debt.

For instance, we’re about done paying off a 13.99% APR Discover Credit Card that we haven’t used now in two years. The Discover payment is $145 per month. But the new interest they charge us every month is about $90, so only $55 is actually going to pay off the debt. If we kept paying only the minimum payment, we’d be paying on that debt for another TEN YEARS!

Now that Kendra’s done paying tuition on her cash-flowed master’s program (W00T!), we’ve been planning $1,500 per month to pay off the Discover Card. That will pay it off in 4 months.

You can use our debt payoff goal calculator to see how fast you can pay off a debt.

That's my boy!But our 10-year-old, Nathaniel, has just qualified for USA Gymnastics TNT National Championships in July (I’m so proud!).

But where are we going to get the money?! Truthfully, we haven’t been saving a bunch of money on the off-chance he might qualify. We didn’t plan for him to have to fly to Texas and stay in a convention hotel for five days and pay the additional registration and coaching fees.

So in this month’s spending plan, we’ll be paying just the minimum toward our old credit card debt so we can save up enough to send Nathaniel to Texas in July. This means that we’ll stay in debt at least one extra month. And that’s not something we take lightly. But it reflects our priorities and our thoughts about opportunity costs.

We also had to increase medical expenses in this month’s spending plan because of an upcoming doctor’s appointment.

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