Teach Your Children About Money

In addition to managing their own finances, parents have another responsibility of teaching their children how to manage money. There are plenty of distractions and misleading information in the world that can pull children away from our faith and how to manage money according to a Catholic based foundation is one of them.

Proverbs 22:6 tells us to “train the young in the way they should go; even when old, they will not swerve from it.” When children begin to understand what money is and what they can do with it, it is time to teach them how to manage money God’s way. Beginning early will prepare them for the time when they are no longer living under Mom and Dad’s direction and guidance.

Fiscal responsibility is an important part of practicing our faith on a day-to-day basis. When we know how to manage our money through earning, spending, saving and giving God’s way, our faith becomes embedded in everyday activities.

One visual tool to help young children manage their money is through the use of three jars, one for spending, one for giving, and one for saving. These are the main concepts of financial responsibility that are important for every adult to have, and this is a good way to introduce these concepts to children at an early age.

It is important to expect children to have chores around the house as members of the household. It is not a good idea to pay children for doing day to day chores – this sets up the expectation that they will be paid for everything they do, instead of teaching them that being part of a family has a level of responsibility. I am sure anyone with children can imagine a child shirking chores if they don't need money that week.

However, you can offer them the option to do more significant chores, or once a year chores such as raking leaves in exchange for payment. This will teach them the value of hard work and encourage them to expend effort for what they want instead of having it handed to them.

Allowances are a great way to help children become familiar with all forms of financial management. The amount you give them on a weekly or monthly basis is not the same in each family, but it should be enough to buy some things, but not everything they want. An allowance needs to teach them how to spend and how to save money for something they can’t afford just yet, and giving needs to be part of their allowance. As they do this, they will realize the value and importance of managing their money.

Another way to teach children the value of money is to give them a set amount of money for a need such as clothing or their school lunch. Once you have given them the budget, talk about how you expect the money to be used. The important thing is to let them spend the money the way they choose.

Experience is the best teacher, and letting children make their own choices with
money and learn from their own successes and failures will leave a more lasting impression than simply being told that what they are doing is a mistake. Helping them learn from mistakes while they are young is especially important because the consequences of their mistakes will be more severe as they get older.

For example, they could spend $50 on a designer pair of jeans, or spend $20 on a regular pair of jeans and have $30 leftover for other clothing items. Or if they spend their lunch money on video games, they are responsible for figuring out how they are going to handle school lunches that week. The important thing is don’t bail them out.

If they don’t understand the consequences of their actions, you can gently question them to help them connect the dots between their actions and the result of their bad decisions. Better to let them make a bad decision on buying an expensive toy at 10 years old when the results are minimal rather than having them make a bad decision on a $300,000 mortgage at 25 years old.

Our children rely on us to help them learn about the world around them, so teaching them the principles of faith based money management is part of that. If they are to be stewards of God’s money, it is our responsibility to show them the way. Remember, what they learn and take away from their experiences now will help guide them through the experiences they face as adults.

Teaching children about financial responsibility is important to showing them the path that God has laid out for them as adults.