One of our family tenets is “prosperity with a purpose,” but prosperity doesn’t just happen. It takes hard work and careful financial management. In line with our goal of raising healthy, happy, responsible adults, we want our kids to grow up understanding the value of a dollar and give them a strong base for responsible money management.
Here are a few strategies we’ve used to introduce important topics related to money, and how we emphasize our family values and how they apply to how we manage our money.
Start Them Young!
Have you read our blog Dates with Children? If so, you may remember that even at a very young age, we used those dates as a chance to teach small life skills. One of those skills was ordering and paying for meals or treats all on their own. This taught them confidence and to speak clearly and respectfully, but it was also a chance for them to start understanding the value of the dollar. They saw firsthand that money was being given in exchange for what they were receiving.
As they got older they started understanding the basic math that goes into making change, and started working on considering the amount of money they had available when it came time to decide what to order or buy. While this might seem minor, by the time they started earning commissions (more on this coming up!) they already knew how far their money was going to go and how to use it.
Commission vs. Allowance
When our kids were old enough to want a little spending money of their own, we thought long and hard on how we wanted to structure it. We were absolutely certain we wouldn’t just be handing out money, but we knew having a little something of their own would allow them to start learning to apply our family values to their money management. The solution to this was to “rebrand” the concept of an allowance. We established a commission structure and explained exactly what commission is: an incentive to increase productivity by paying workers for actual work completed.
While many kids do chores to earn an allowance, we believe the concept of commission helps them understand why they get paid for work completed, and why their commission goes down when chores are left undone or when someone else has to pick up the slack for them. It helps keep them accountable to their responsibilities when they know exactly what’s at stake.
Give, Save, Spend
Our family’s values as related to financial management can be boiled down to giving generously first, saving wisely second, and spending responsibly last. When it comes time to pay out commissions, we gather the full potential commission amount in small bills and sit with the child to review their checklist for the week.
If anything was left undone, part of the commission is lost. If everything was done satisfactorily, they earn the full amount. We also offer a small bonus if all seven days on the checklist are completely checked off and initialed by a parent. That bonus incentivizes them even further to achieve a “perfect” week, but it also encourages them to maintain the checklist system we have in place and stay on top of it throughout the week.
Once the gross commission amount is determined, it’s time for them to manage their money using our family’s values as an outline.
First, Give Generously.
A generous person will prosper;
whoever refreshes others will be refreshed.Proverbs 11:25
At least 10% of every commission goes to God, or to a related charitable cause. Some causes close to our heart include Hearts Afire (our family went on a mission trip to Kenya with them in March, 2020), Hands of Hope Tucson (a pregnancy resource center we are heavily involved in) and a former nanny turned missionary.
Next, Save Wisely.
It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.Robert Kiyosaki
Our kids save at least 20% of every commission. When asked about how he views his savings account and how he make decisions about if and when to use any of it, this is what our youngest boy, Dylan (11), said:
“I don’t spend my savings a ton an I prefer to only spend my spending money. But if there is something I really want I go to my parents and ask how much I have in my savings. If I have enough and it’s worth it to me I’ll spend it but I like to keep money in my savings.”
Finally, Spend Responsibly.
“You must gain control over your money or the lack of it will forever control you.”Dave Ramsey
While we encourage responsible spending, we also know that this is something they will learn over time, often through trial and error. We also know that “responsible” spending at their ages is very different than our version of responsible spending! Instead of telling them exactly what to spend their money on, we remind them not to make decisions too quickly and to think critically about their choices. Pausing before buying gives them a chance to think about whether they want the immediate gratification of buying a snack now or whether they want to get something to eat at home and save the cash for something more extravagant like shoes.
Another way we teach our kids wise money management is this: normally when we are out for a family meal we don’t pay for our kids to have anything other than water to drink. Not because we can’t afford it but because we want to teach our kids the value of money. It’s not surprising that when we remind our kids “you can have any drink you want as long as you are willing to pay for it” that they frequently opt to stick with water. It’s better for them anyways.
We also helped our teen kids get their own debit card for personal spending. The money in the account is money that they earn or get for birthdays and holidays. It teaches them how to spend money electronically without going into debt – an easy trap that I fell into my first year of college.
There’s no doubt that skyrocketing consumer and national debt is a huge issue in our society. We believe that a lack of intentional parenting is the upstream cause of this downstream problem. We want to invite you to join us on the mission to intentionally train our kids and youth how to be good stewards of the little that they have now so they can experience the blessing of the parable of the talents (see Matthew 25:14-30), see their talents multiply and ultimately be given more to do more good in this world! Money management is a great place to start.