Your child may be too young for an allowance, but he or she’s not too young to be introduced to the all-important right approach to money.
Ever read the poem “Smart” in Shel Silverstein’s Where the Sidewalk Ends? It begins:
“My dad gave me one dollar bill
’Cause I’m his smartest son,
And I swapped it for two shiny quarters
’Cause two is more than one!”
This “smart” son continued his “upward” trading—exchanging the two quarters for three dimes, and the three dimes for four nickels, and finally the four nickels for five pennies! The poem concludes:
“And then I went and showed my dad,
And he got red in the cheeks
And closed his eyes and shook his head—
Too proud of me to speak!”
One might wonder if perhaps Dad gave his “smartest son” an allowance before he was really ready for it! But even if your child doesn’t yet know the value of different coins or bills, you can still set the stage for him or her to learn how to handle money responsibly.
It all begins with you!
Whether you realize it or not, you’ve probably already begun your child’s lessons on finances. Your example as a parent in handling money is the foundation for every other finance lesson you can teach. The attitude and approach that you have toward money will rub off on your child.
From an early age, your child should see you being a careful shopper. Let him or her help you make your grocery list and talk about how these are the things that your family needs to buy. Let your child see that you plan what things you’re going to buy rather than buying impulsively. Talk about the difference between needs and wants.
As your child grows, you can ask him or her to help you compare items. You can talk about which box of cereal contains more (the size of the box doesn’t always give the answer!), which is healthier for your family and which has the better price. You can also talk about television commercials and how advertisers try to get you to buy their products.
If you’re frugal and restrained in how you use money, your child will be more likely to learn those traits too!And you can model patience in your purchases. Tell your child, “No, I think we’ll wait to get this until it’s on sale.” Remember, if you’re frugal and restrained in how you use money, your child will be more likely to learn those traits too!
Money doesn’t grow on trees
Another introductory concept to teach is where money comes from. (It’s not really as obvious as we think!) Explain to your child that people work and that’s how they earn money. And they earn money so that they can buy the things that they need. It’s important to explain that God is the One who gives us good health and makes us able to work and produce. The money we earn is related to our effort and diligence (Proverbs 10:4), but ultimately God is the One who gives wealth (verse 22).
As well, you’ll no doubt need to clear up misunderstandings about credit or debit cards, since it’s easy for children to think of it as free, limitless money. We’re becoming an increasingly cashless society, but make an effort to use cash whenever possible when your child is with you.
When you must use your credit or debit card, give a simple explanation of how it works. A credit card represents money that you’re promising to pay later. A debit card represents money that is going directly from what you’ve put in the bank to the store or restaurant. It may be a while before your child really understands, but keep the explanations coming at regular intervals.
Your child should learn that money is a limited resource. It’s good for your child to hear you say, “We don’t have enough money to buy that.” “We can’t afford that.” Likewise, there should be times when you can say, “We’re saving to buy a (whatever)!” Your child should learn that it’s okay to spend some money now, but it’s also important to save some for later.
Children in the early elementary grades are ready to be introduced to the concept of budgeting. You can illustrate how a budget works in your own home by using “play” money from a game such as Monopoly or Life. Count out a pile of bills to represent what your family earns each month, and then pay out what’s needed for rent or your house payment, food, water, electricity, gas for the car, etc.
Remembering to give
Of course, we don’t want to raise a little miser. Understanding that selfishness doesn’t lead to real wealth (Proverbs 11:24-26), we want our children to learn not only how to be careful with money but also to have appropriate generosity. You can talk about how your family uses some money to give gifts, to help others or to help worthy causes. Teach your child that one of the reasons you work and earn money is so that you can help others who are in need (Ephesians 4:28).
And, of course, as Christian parents, we want to show our children by our example that we honor God with the money He has given us. This includes tithing—the portion of our income that God claims as His own, since He is the Creator of everything. And it also includes offerings that we give to God beyond the tithe (2 Corinthians 9:6-8). Teach your child that God is the source of all of our financial blessings and that your family seeks to have Him be your Financial Partner.