Teaching Young People (and Adults) About Money

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We can teach children, including young ones, about money by providing a simple system, helping them use it, and coaching them to make sure they stay with the plan. The system in this article is based on the book, Five Wealth Secrets 96% of Us Don’t Know, by Craig Hill.

Planning is essential to using money effectively. Decide how much of your child’s income they should allocate to important categories to make sure they’ll use the funds wisely. The following categories and amounts help young people learn important life lessons with relatively little risk. I suggest using the plan or learning the life lessons yourself before teaching others.

Tithe (10%)

We’re stewards of all God provides or helps us earn, not owners, and he says the tithe – literally, “a tenth” – belongs to him. He says if we don’t tithe, we’re stealing from him (Mal. 3:8, NIV84) and Jesus affirmed New Testament believers should tithe (Matt. 23:23). God doesn’t need our tithe, but we need to give it as an expression of our love for him and it’s a practical way to prevent the money from becoming our treasure (Matt. 6:21). When we consider everything God has done and is doing for us, 10% is nothing by comparison! Life lesson: We honor God with the tithe.

Regardless of what we do about the other categories in this plan, the tithe should be nonnegotiable. It is to God, because it helps us learn to trust him, and that’s an invaluable lesson for us at any price.

Generosity (10%)

God wants us to help people who can’t help themselves (Deut. 15:11; 1 John 3:17). It’s best for us to support ministries that help the poor, rather than give directly to the poor, so we don’t become proud of what we do for them and they don’t depend on us personally.

We honor God by being like him, who loved people so much that he gave what they needed (John 3:16). Every human has God’s image and likeness, regardless of their spiritual condition, and we serve him by being generous to them. Jesus said the second greatest commandment is to love your neighbor as yourself, so we clearly should help people who can’t help themselves. Life lesson: We honor God and people by being generous.

Long-Term Savings (10%)

A wise person plans for the future (Prov. 22:3; Luke 14:31) and staying out of debt is very important (Prov. 22:7). For major purchases, make “payments” to yourself by putting money in a savings account to earn interest, instead of borrowing money and paying interest, which increases the item’s cost. This helps young people learn to plan ahead for necessities and the unexpected. Life lesson: Think long-term.

Business or Investment (20%)

Multiply your money by putting it to work (see Matt. 25:14-27). You can do this by starting your own small business, doing something for others they don’t want to do themselves or making a product you can sell. Or you can invest in another business. Effective stewardship is a strong biblical principle, so become productive by putting money to work, and not just be a consumer. Life lesson: Being a good steward includes putting the resources God gives you to work

Spending (50%)

Use what you have left to buy what you need or want. Life lesson: Live within your means and don’t consume everything you have.

Application

If you want to teach stewardship to your underage children or grandchildren, you can give them an allowance and explain this plan to them. Give them envelopes or jars to use and label each one to identify the category and amount. For example, if you give an allowance of $10, you could label them as follows: Tithe 10% ($1); Generosity 10% ($1); Long-Term Savings 10% ($1); Investment 20% ($2); Spending 50% ($5). For a very young child, consider an allowance of $1 and reduce the amounts accordingly; for example, Tithe 10% (10¢). Of course, give them the dollar bills or coins they need for each category.

You can give the allowance weekly, biweekly or monthly; whatever’s appropriate for them. You’ll need to monitor their progress, of course, making sure they divide the allowance as indicated and use the money appropriately. The younger or less-disciplined they are, the more important this will be.

If you want, you can begin making small steps toward a system like this for yourself, even if you already have fixed expenses. Every few months, make an improvement. If you’re not setting aside funds for a category, begin with at least a portion of the recommended amount and increase it as you’re able. The tithe percentage is nonnegotiable, but you can adjust the other categories as needed. Disburse your tithe and generosity as soon as you receive your income and consider creating separate accounts for savings and investment.

Summary

Young people and adults can learn healthy financial habits based on biblical principles that will help them for the rest of their lives. This plan includes important life lessons: Honor God with your tithe, honor people by being generous, think long term, put your resources to work, and live within your means.

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