Money is one of the most concrete ways you can teach life lessons. By training your children in simple, tangible ways, you will set them up for success — with money and possibly in life.
I raised five children who had five different money styles. My oldest wanted only designer labels. The second hoarded everything. My third couldn't stand the rigidity of a budget. The fourth wanted to give it all away. And my youngest could make a buck doing anything.
Perhaps your children's money styles are unique, too. With so many different personalities, teaching our kids financial wisdom can seem complicated and confusing. Where do we start?
1. Your finances
We need to remember that good financial skills are more easily caught than taught. All the talk in the world won't produce results unless parents model the behaviors they are looking for. Do you wish to see stewardship, generosity or prudence in your child? If you are not pursuing those traits in your own life, your children won't act them out. Children don't listen well, but they observe like scientists and mimic like first-rate impersonators!
2. Wise stewardship
We should teach the five disciplines of wise stewardship: recognize that God owns it all; spend less than you make; avoid debt; maintain savings; and set long-term goals. In our home, we used the "envelope system" to help our children learn good stewardship. Our children all had a set of envelopes labeled "save," "spend," "tithe," "clothes" and "gifts (for family and friends)." Each month, they divided their income into those five envelopes.
By having limited resources and by spending their own money, the kids learned, in a safe environment, the lessons that you and I learn from our budgeting successes and failures. And my wife and I were their advocates in the process rather than their adversaries.
Because money is tangible, it is one of the simplest parenting tools available. You may wish, for example, to teach your children that God is in charge. By training them to tithe, you tangibly point them to God's ownership of their resources. Or you may want to teach them to recognize boundaries. By using the envelope system, you show them that once money is spent, it is gone for good, and they learn the concept of monetary boundaries.
Ron Blue is the author of numerous books on personal finance, including Your Kids Can Master Their Money.