It’s a simple question we get from time to time: “When should I start teaching my kids about money?” The answer, however, isn’t always as simple as the question. It all depends on what you’re trying to teach your children. We’ll share some “age-appropriate” money lessons for kids, on Faith and Finance.
It’s a simple question we get from time to time: “When should I start teaching my kids about money?” The answer, however, isn’t always as simple as the question. It all depends on what you’re trying to teach your children. We’ll share some “age-appropriate” money lessons for kids, on Faith and Finance.
Christian parents are well-acquainted with Proverbs 22:6, “Train up a child in the way he should go; even when he is old he will not depart from it.” That training, of course, includes managing money wisely, according to God’s financial principles.
Teaching the practical application of those principles isn’t a one-time thing— it’s a process— and it requires teaching certain things at certain times as your child grows and matures. So let’s look at some money lessons for kids at various ages.
GETTING STARTED
Maybe as early as age three, and certainly, by age five, you can introduce the idea that buying things requires money. That’s a simple concept, and it’s followed by the idea that you have to earn money, and that means work.
Then teach that once you have money, you can spend it on things, or you can save it, or you can give it. You might even give a very young child a small amount to put in the collection plate on Sunday.
At this early stage, you can also introduce the concept of needs and wants. Explain that you need to have a place to live, a way to get around, and food to eat, but that many other things are wants. You don’t “have to have” them, but they’re nice. Just about anything a small child begs for in the grocery store will fall into the “wants” column, and that’s a teachable moment.
You can also introduce the basic concept of budgeting at this early stage, using the “three jars” approach. As children receive money, perhaps from birthday or Christmas gifts, they can divide it among jars for spending, saving, and giving.
NEXT STEPS
When children reach 9 or 10, they’re ready to learn more about earning money and managing it. You can give them opportunities to do that around the house. You could also elect to give them an allowance each week, for which they’re expected to perform certain chores without being asked. If a chore isn’t done, the allowance is withheld until it is.
PRE-TEEN AND EARLY TEEN YEARS
From ages 10 to 15, you can expand on the idea of working to earn by giving your kids the chance to earn greater amounts for doing more difficult chores, such as babysitting or mowing the lawn. You can also help them set savings goals. You can even set up a custodial account for them at the bank, or use a money app for kids.
You can build on the budget concept by setting aside a little from the family’s grocery budget. At the store, let children decide which of their favorites to spend it on. That’s a quick way to drive home the idea that money is always limited— that you always have more choices than money— as Ron Blue likes to say.
In this “10 to 15” stage, you can also have children decide on a ministry they’d like to give to. Teach them to tithe to your local church, but let them choose where they’d like to give beyond that. Raising faithful tithers and generous givers— what more could you want?
LATE TEENS
Now we come to ages 16 to 18. At this stage, children are able to work outside the home to a great extent, and in some states, even younger than that. (14 in Georgia, 16 in Wisconsin, for example.)
This will give them the opportunity to earn a great deal more than they can around the house. Whether that income is constant or varies, help them set up a budget with necessary categories. Emphasize the importance of sticking to that budget so they can meet their goals, which by this time could be things like a car, or saving a certain amount for college.
You can also offer to match what they save. Instead of just buying your teenager a car, encourage him or her to save for it by matching what they put in the bank, much like an employer might match contributions to a 401k.
This is also a good time to teach the value of investing, again with a custodial account or an app. Let teenagers decide which stock or stocks they’d like to buy (probably in fractional shares). Impress on your children that you don’t automatically sell a stock if it loses value, that the market goes up and down, and that investing is for the long haul.
You can also set up Roth IRA accounts for your kids if they have earned income, or a 529 education savings plan, and again, let them choose a stock to invest in within those accounts.
You want to teach these money lessons to your kids at the appropriate times— so they’re ready to take on the responsibility of managing money on their own— and doing it wisely.
On this program, Rob also answers listener questions:
What is a wise way to invest $5,000 at age 57?
How do you determine if it’s wise to go back to school in your 40s?
How can you engage in faith-based investing on behalf of a child?
When is a Roth IRA the best investment vehicle for you and how do you determine that?
Remember, you can call in to ask your questions most days at (800) 525-7000. Also, visit our website at FaithFi.com where you can join the FaithFi Community, and give as we expand our outreach.
