By Wendy Anne Clark
“If you would know the value of money,
go and try to borrow some.”
I can’t stress enough how important it is that we teach our children the value of money and what it means to be careful managers of all that we have.My two oldest girls are teenagers now, not far from being adults. They understand what it means to work to in order to save up for something that they want or would like to do, to pass by things they want in order to save for something they want more, and to take care of the things they have, knowing they are not easily replaced. These may seem like simple concepts, but I’m finding that many of their very nice friends from very good homes know nothing of the value of money. My girls have noticed this as well and have commented on how many of their friends lack gratitude for all that they have.
When I was growing up, my family had a lot of kids, a lot of love, but not a lot of money. I learned early on that what other kids might easily ask for and receive, my family would not be able to afford. I understood that any money I spent was actually family money and would mean that it couldn’t be spent on something else, so I learned to consider if something was really important. If my parents gave me money to buy a souvenir on a field trip or at camp, I was very thoughtful in how I spent that money because I knew it was precious and that spending it was a rare opportunity.
Early in our marriage my husband and I both taught tenth grade Sunday school at a church in Southern California. He taught the tenth grade boys while I taught the girls. We had some occasions to have the two groups together and were once talking about how excited we were to be buying our first new car—a Sprint. I’ll never forget the response of the students who told us of the new cars they planned to get from their parents when they turned sixteen—cars that were far more expensive than what we had saved up to buy for ourselves. That began a very revealing discussion with these kids, many who had been given too much throughout their lives. They felt entitled to much and grateful for little. They didn’t know how to earn their own way. They had no understanding of the expenses of buying and owning a car. They believed the supply of money for their desires was bottomless and that they should be able to have whatever they wanted when they wanted it. The sobering reality is that many of these kids were growing up in pricey neighborhoods that they were not going to be able to afford to live in when they were ready to be on their own. How would they do when it came to having to give some things up to survive? What was going to happen when buying a car meant coming up with the money for themselves?
In the end, many of these kids lived with their parents well after college and then financed their early years of adulthood with credit cards and massive debt. Some of them found that they could support their spending habits only by working incredibly long hours—sacrificing many more important things in life.
Now I see these same attitudes in some of my girls’ friends, and it makes me sad and ever mindful because I still have a six year old who is just in the beginning stages of learning about the value of money. Thankfully, it’s not that difficult to teach children the value of money; we just need to be thoughtful about doing it.
When your kids are young, start by giving them a small amount of money “to manage.” Using the term “manage” is very important because they need to understand that the money isn’t really theirs—it’s coming from the family finances and it’s important that money never be wasted. You don’t have to give a large amount of money—even a dollar will do. Whatever you decide to give them, it should be regularly—like once a week. Break the money into small amounts so that there is a portion to give back to God (to recognize that all that we have really belongs to God), a portion to save, and a portion to manage. Again, use the term “manage” instead of “spend” since sometimes good management means not spending right now.
One very good book on teaching your older kids the value of money is Mary Hunt’s book Debt Proof Your Kids. My brother gave me the book after he got to know one of Mary’s sons and saw how well he handles money. According to my brother, Mary’s son is generous, a faithful giver, a saver, and not one given to credit card use. I enjoyed the book and found many good principles. Mary Hunt writes about giving over large sums of money to your children to manage.
We never got to the point of having our girls manage all of their money, but the part that they did have to manage had a big impact on them. When they were about eleven or twelve, we gave our girls a clothing allowance to manage. We sat down and figured out about what we spend in buying them clothes during a year and divided that sum by twelve months. Then we gave them a portion each month to manage. We made sure they understood that this was family money—part of the whole budget for the family. We then began to teach them what it means to “manage” money.
Here are few important points to teach your kids when giving them money to manage:
1) This is the portion you have to manage. Once you spend it, you will not get another portion until the allotted time. It is extremely important that you don’t give in and bail out your kids. If they spend all the money right away, they must wait until the next allotment of money is due. Waiting is essential.
2) Make a list of things you need and things you want. Then prioritize that list. Don’t just give your kids a chunk of money and then wait to see what happens. Teach them what it means to make decisions about how that money will be spent.
3) Spend time shopping around and looking before you buy. Compare prices and quality, and don’t make a decision on the spur of the moment. Show your kids ads, take them to different stores to look. Expose them to bargain stores like Target and Ross. Take them to a thrift store and teach them to look for quality, good-condition items and to compare the prices. If something looks really good but wasn’t a planned purchase, teach your kids to go home and think about it rather than making a spur-of-the-moment decision.
4) If you need (or want) something that costs more than you have this month, save your money and wait until you have enough to purchase it. This again is the principle of waiting—delayed gratification—and is extremely important for your kids to grasp. Credit card debt is what is in store for kids who miss this lesson.
5) Look for ways to work to earn more money. Teach your kids to ask your adult friends and neighbors for job opportunities—babysitting, house cleaning, yard work, organizing, pet care etc. Make sure that they are prompt, faithful, and do a good job.
6) Borrowing money is costly and burdensome. Make sure that your kids understand the cost involved in borrowing money and the benefit of saving up in advance. Demonstrate how much something would cost when purchased on a credit card compared to what it would cost if paid for in cash.
7) It is honorable and wise to use money to bless others. Make sure that your kids know the joys and blessings of generosity. Teach them to set aside money specifically for the purpose of giving to others.
Our two teenagers are great money managers. They know what it means to wait for something they want. They have learned that sometimes paying more buys better quality, but that sometimes it doesn’t. They know how to find a great bargain at a thrift store or discount store and are very thankful for all that they have. They realize that sometimes the thing they think they most want, they won’t care about at all in a day or two. They work, plan, save, and as a result, enjoy everything that they have so much more than their bored friends who simply assume they will have what they want when they want it. Our girls thank us any time we take them out to eat or buy them something we know they will like. They recognize these things as treats or gifts and not entitlements. As a result, it is a pleasure to surprise them with something special—they are so grateful and gracious. That’s what I want for my six year old, and so I will be diligent to teach her about the value of money and what it means to be a good money manager.