It’s your responsibility to teach finances to your kids.
I 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.
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
When 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.
Junior’s Adventures – Dave Ramsey
We got him Junior’s Adventures by Dave Ramsey. He really enjoyed these little stories about earning, saving, spending, integrity, staying away from debt, and sharing out of abundance.
Nathaniel is 11 years old now, but he still likes to listen to the CDs. Sometimes he wants to listen to them while falling asleep. Okay.
Passively Listening to Dave Ramsey
We’ve also listened to Dave Ramsey’s radio broadcast in the car for years. Nathaniel listened intently to the stories and the “Debt Free Screams” and told me that he wants to do a “Debt Free Scream” on the show when we finally pay off our debts.
I can’t tell you how many topics this has brought up over the years. We talk about taxes and retirement and emergencies because we listen to Dave.
For instance, Nathaniel once called me out (publicly, in a store) for using a credit card! I explained to him that it was a debit card. When we got back to the car, we talked about the difference between credit (paying to use someone else’s money) and debit (using your own money that is stored at the bank). That conversation about credit and debit lasted a couple of days and had some long-lasting implications.
Money Making Ventures
One of the long-lasting implications of that conversation about debit and credit was Nathaniel becoming a loan shark! I thought I was teaching him not to use credit. But what he heard was, “people have to pay you a lot of money as interest when you lend money to them.”
One day, Nathaniel came home from school with a $20 bill. It turns out he had lent a kid a couple of dollars to buy some pastries. And then he had convinced this kid that he had to pay $1 for every day that the money was borrowed until it was completely paid back. Nathaniel proudly told me that his friend still owed him $13.
But I had found out that he just really wanted to make money.
So we came up with a plan to buy a box of candy bars at Costco and then sell them for a profit. Each individual candy bar cost him about $.47 and he was able to sell them for $1.00. Each box of 30 he bought and sold made him a handy profit!
Sponsoring a Child in Nepal
I guess I must be pretty jaded. My heart is no longer moved by stories of underprivileged children in foreign countries. But when someone came to our church to raise tuition money for kids in Nepal, our 9-year-old was moved and insisted that we sponsor someone!
I hemmed and hawed. We already donate 15%+ of our income to nonprofit organizations. We didn’t need to give to another one. But my heart was moved by Nathaniel’s generous spirit when he said he would gladly forgo his allowance to help a child in Nepal. So what could I do? We didn’t want him to give up all of his allowance, so we agreed he could give up half of his allowance for a year to sponsor a child. And we paid the rest of the sponsorship amount.Don't extinguish your child's generous spirit. Impulses to help others in need are at the core of our humanity. Click To Tweet
Secret Millionaire’s Club
Looking around on the internet for some entrepreneurship resources for him, I came across Warren Buffett’s Secret Millionaires Club.
Nathaniel LOVED this site and watched all of the videos a couple times each.
Each video teaches entrepreneurship, integrity, finances, and business principles. It’s pretty awesome.
He had heard about investing (either from Dave Ramsey or Warren Buffett) and asked about it. I explained to him that investing in a company was like becoming a part owner of that company. And when the company did well, his part of the company was worth more. And that it was a good way to make money.
We started talking about different companies. He was really into Nerf Guns at the time, so we looked up Hasbro and started to track it in a notebook. We didn’t track it very often, but he noticed that the value kept going up (even if it went down sometimes).
Here’s a Stock Tracking Worksheet you can use to do the same thing.
Investing with Schwab
After Nathaniel had tracked Hasbro for a while, Kendra and I decided it was time to get him his own investment account. So for Christmas when he was 9, we opened up a FREE UTMA at Schwab and put in $100. We chose a growth ETF to get him started.
The next Christmas, he got another $100 to put into the account. And when he turned 11, he decided to start putting $4 every week from his allowance into the account to buy more ETFs. Now, along with his growth ETFs, he owns a couple shares of a REIT ETF and an Emerging Markets ETF.
We have fun looking at the account from time to time, researching different funds, and learning about different things to invest in.
NOTE: Legally, the money in this account MUST be used for the benefit of the child. The account then becomes the property of your child at age 18 or 21 or whatever age you choose.
The bad news about this account is that having a large amount of money in it will negatively impact your child’s chances of receiving financial aid for college. So before he fills out his FAFSA, I plan to liquidate and close this account and use the money to buy him a car or something.
Bank Account with Debit Card
Nathaniel had shown us he was trustworthy with money, so when he turned 11, we decided to let him open up his own checking account. We use the MONEY account from CapitalOne360.com, which gives him a debit card and login (and it’s linked to our own accounts there).
Every week he gets a $10 allowance. $4 gets deposited into his Schwab account (per his request), $4 gets deposited into his MONEY Account for him to spend, and $2 is given to him as cash for tithes and offerings at church.
NOTE: HE DOES NOT HAVE POSSESSION OF HIS DEBIT CARD!!! He only uses it when we allow him to use it. But he knows that when he wants to buy something, he can check his balance, ask for the card, and buy (almost) anything he wants up to that balance. We still retain veto power, but find we don’t need to use it often.
This is usually part of a local Credit Union. If your Credit Union has a subscription, use it!
It’s a long adventure and may take your child several days to complete the missions, learn all about finances, create a sustainable passive income, and free “Stone Broke.”
The site will even send you updates on what your child has learned and completed along the way.
Work = Money
Here’s what I’m planning for the summer.
I want to pay some church members to hire my son to do yard work. I want Nathaniel to earn some good money for our trip to Korea. AND I want to teach him the link between work and money.
If he can work 4 full, hard hours and get $40, I think he’ll learn a lesson from that.
If he works 4 half-hearted hours and gets $20, I think he’d learn a lesson from that, too.
Even if that means I have to engineer it, pay for it, take him there, pick him up… I want this life lesson taught this year! It’s a lot more work than just handing the money to him or transferring it into his account. But I believe it will be worth it.
So that’s our financial education journey so far. It’s not perfect, but it’s a lot better than what I got as a child.It's your responsibility to teach finances to your kids. Don't assume they'll get it from high school or college.… Click To Tweet
Remember, it’s your responsibility to teach finances to your kids. Don’t assume they’ll get it from high school or college. They need to get it from you! You can start building good habits into their lives now!
Let me know what you’re doing to teach your kids about money. I’d love to hear about it!