Teaching Young People About Money
Summary: Young people can learn healthy financial habits based on biblical principles that will help them for the rest of their lives.
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 have the funds they need. The following categories and amounts help young people learn important life lessons with relatively little risk.
We’re stewards, not owners, of all God provides or helps us earn 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) and Jesus affirmed that New Testament believers should tithe. (Mt 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. (Mt 6:21) When we consider all that God has done and is doing for us, 10% is nothing by comparison! Life lesson: We honor God with the tithe.
God wants us to help people who can’t help themselves. (Deut 15:11; 1 Jn 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. (Jn 3:16) We honor people by being generous to them and it’s a great way to love and serve them. Jesus said the second greatest commandment is to love your neighbor as yourself, so we 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 (Pr 22:3; Lk 14:31) and staying out of debt is very important. (Pr 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.
Multiply your money by putting it to work. (Parable of the talents, Mt 25:14-27) One way to do this is to invest in a business. Consider starting your own business doing something for others they don’t want to do themselves or making a product you can sell. Use your investment money to finance your business. Effective stewardship is a strong biblical principle, so become productive by putting money to work, not just being consumer. Life lesson: Being a good steward includes putting what God gives us to work.
Use what you have left to buy what you need or want. Life lesson: Live below your means and don’t spend it all on yourself.
If you want to teach stewardship to your under-age 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, bi-weekly 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 year or every few months, do what you must to become a better steward. Be careful not to automatically eliminate any of these categories, even if you think they’re impractical for you, such as “investment”; begin setting aside at least a portion of the funds and let God show you how to use it. The tithe percentage is non-negotiable, 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.