When my children want to buy something at the store, I don't say, "No, you can't have it." Instead I ask, "Do you have any money in your checkbook?"
Before my children became teenagers, I decided to teach them about financial responsibility. I gave them their own checkbook ledgers. They recorded weekly allowances under the deposit column, while purchases were posted under payment withdrawal. Each Friday, they balanced their books.
I'm hoping this practice keeps them from becoming part of these statistics reported recently by Sallie Mae.
Of 13,000 college students, more than half had accumulated $5,000 or more in credit card debt while in school, and one-third owed over $10,000 in credit card debt. In light of this information, I decided I better start training earlier rather than watch them face their future creditors later.
As adults, we've become so accustomed to managing our own money that we often forget to introduce basic concepts to our children. How is money earned and deposited? What is the function of an ATM machine? What does it mean to balance a checkbook?
These are simple to us because we've been doing them for years; to your children, these are foreign concepts. We assume they know more than they do, but don't let them fool you. For example, a recent survey taken by the JumpStart coalition for Personal Financial Literacy of 5,775 high school seniors from 37 states, found that only 40.3 percent of the students realized that they could lose their health insurance if their parents become unemployed.
I decided one of the best ways to explain how finances work was to have my children make out the checks for our family bills each month. This way they can see how quickly Mom and Dad's paycheck is eaten away by mortgage, utility and phone payments. It also gives them a first hands look at what is required to make ends meet.
Besides handing over the checkbook, we decided to hold regular family meetings where we talk about our financial goals and review current budgeting decisions.
Of course the education process wouldn't be complete without incorporating godly financial principles. In our materialistic world, teens especially are inundated with media and their peers telling them they need to have more stuff; if they don't tread cautiously, they can become sucked into the false belief that "money solves everything."
Having regular finance meetings are a great opportunity to introduce many Bible verses that teach eternal truths about money, like what Matthew 6:21 says: "For where your treasure is, there your heart will be also."
Luke 16:13 and Ecclesiastes 5:10 are other great examples: "No servant can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money" and "Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income. This too is meaningless."
These verses can provide a springboard to discuss how to best view money in God's economy.
You may be ready to move beyond convincing your kids about the importance of fiscal responsibility. Are you ready to help them develop sound financial habits? Here are some practical tips you can put in their back pocket:
- Set up a personal savings account at the bank for long-term savings.
- Deposit clothes, money and toiletries into an account for him or her to manage.
- Help your teen write out a monthly budget that is based on income and expenses.
- Help your teen contemplate unexpected expenses like repairs for a broken bike or lost items. Encourage them to set aside an emergency fund for these unforeseen events.
- Explain how interest and investing works. Some banks and credit unions offer workshops on these topics for free.
- Make sure your child knows you are available to answer any financial questions.
Entrusting teens now with opportunities to spend and save money allow them to learn while under parental guidance and protection. Today's financial mistakes become teachable moments for better spending habits and responsible stewardship tomorrow.