4 Financial Principles to Teach Your Kids

In John 3, the apostle John says, “I have no greater joy than to hear my children are walking in the truth.”  Now without adding to Scripture, might we jump off that and say, “You will have no greater joy than to have your children paying their own way.” 

Something we want to encourage you as a parent or grandparent is to start very early teaching your kids financial wisdom. To see your children in 10 years, 15 years, 20 years, grown and graduated without student loan debt (maybe) and living in a way in which you don’t have to support them, is a good and responsible future you can envision not only for them but for yourselves as well.

So consider these four simple yet important principles you can teach your children about financial responsibility. We’ve also included some questions for consideration to help you start thinking about how to apply these four principles in your home.

Help Your Children Understand the Meaning of “No”

One of the things that children need to know is that you have limited resources.  You cannot buy everything that they want. You know that. I know that. But kids need to know that too.

“Daddy, I want the new Lego thing.” 

“OK, sure buddy thats fine.”

“Daddy, I want to go to Disney World tomorrow on a private jet.”

“No on the private jet. Tell you what, we’ll work on Disney for next summer!”

When you say “no” that means “no” and it needs to carry the weight of being true. This actually gives your children a lot of confidence because it gives them parameters, clear expectations, and understanding of resources at a young age. Teaching financial principles to children can be difficult, especially telling them a disappointing "no" now and then. However, perseverance and good strategy will pay off as you impart these lessons to your kids.

Questions for Consideration:

• How do your kids behave when you tell them "no"? How do you respond to their negative reactions?

• Are you and your spouse on the same page? Is it more difficult when you're under stress, tired, or they've worn you down? Is there anything that needs to change?

• How can you use these times as teaching moments and not cave in or be divided? What can you do to help them learn greater contentment? 

Delayed Gratification Teaches Patience

It’s no secret that kids are growing up in a “me-first” world while receiving encouragement towards selfishness from all sides. Now more than ever, something that kids need to understand from an early age is delayed gratification, which will in turn teach them patience and sharing.

In 1970, there was a famous experiment done at Stanford University appropriately called “The Stanford Marshmallow Test.” It was a study on delayed gratification where a group of psychologists put kids in a room and observed their ability to wait. The child is given a marshmallow.  The administrator leaves the room and says, “If you don’t eat this marshmallow by the time I get back, I will give you two marshmallows.”

What’s interesting is that the researchers tracked these kids over a 20 year period and found that the kids who were able to delay gratification were not only statistically more likely to be self-controlled but they were more emotionally adjusted, they had healthier relationships, and they scored an average of 210 points higher on the SAT.

We all have to learn to wait.  We all have to learn to share and give to others. We know this.

So we must teach our children that they have to wait for things they want. 

So consider this framework that will help you teach your kids to wait for the things they want. This will help them see how money is always allocated into four categories: Giving, Saving, Spending, Investing.

• Giving: This is money that is first given to God as your tithe and given to help others. This could look like you telling your kids: “The first thing we do is give our tithe to church and then give to whoever or whatever we’re passionate about.” This could be an opportunity to broaden your kids view of the world too in talking about missionaries or other organizations like Compassion International, World Vision, etc.

• Saving: This is obviously money set aside for a big purchase and teaches a child to wait patiently until he or she has enough for it.

• Spending: This is the fun part.  This is money to buy things fun for yourself.

• Investing: In today’s climate, this is a wise category to teach your kids.  This could be anything from financing a lemonade stand to starting a college fund to using an app like Acorns or Robin Hood. 

The main thing about this framework is communication and interaction with your child.  I am sure you have college funds and life insurance you pay into for your kids. However, when you are intentional about allocating their money or they’re allowance, that is when the skills and wisdom actually take hold.

One consideration though: consider using percentages to allocate into these four categories. For instance, teaching them to put 10% of their allowance into giving, saving and investing still allows for 70% in spending. This gives them a healthy framework for the future when they receive an actual paycheck while teaching them to plan ahead for what matters right now.

Things that seem out of reach or impossible to attain are frequently accessible if you plan wisely. If you help your kids to save for a big purchase, they will likely retain valuable lessons about delayed gratification and impulse spending, and it will cause their giving to happen more frequently than their spending, another vital lesson for the good steward.

Questions for Discussion:

• How well will your children take the lead in allocating their own money? How can you help and remind them according to their age and comprehension? How can you help them with investment?

• How do the lessons of delayed gratification and giving to others practically work out in the lives of your kids? What does it look like in your own life? How are your kids learning from your model? 

• In regard to spending and finances, where have you seen cultural evidence of a "me-first" generation in your kids? How do you help your kids avoid this cultural tendency toward selfishness?

A Family is a Team That Works Together

Assigning chores for every member of the family leaves a positive impact on kids (and less work for mom and dad.)  As you teach your kids that every member of the family contributes, ideally they will learn personal responsibility and that they are part of the everyday form and function of home life.

A family is a unit that has to help each other.  So there are certain things in your home that your kids probably should not get an “allowance” for.  Things like making their bed, taking out the trash, picking up behind them, cleaning their bathroom; they are just expected to do these things.  That is their responsibility.

Now, these are just examples and you most likely have different examples in your home. These are simply things that teach personal responsibility and prepare for adulthood. Additionally, these are things that contribute to a good work ethic and prepare them to be a good family member and a good citizen.

There are numerous creative ways to institute a system like this in your home. Any mom blog or Instagram influencer will probably have a ton of ideas.

Consider this one involving envelopes:

• Prepare two envelopes that hang on your refrigerator and in it have popsicle sticks with your kid’s individual chores on them. So there are two envelopes with two pockets; one is labeled “To Do” and another pocket is labeled “Done.”

• Kids start each week with popsicle sticks in the “To Do” pocket that identifies a chore that must be done (making the bed, taking out the trash, or whatever the responsibility is.)

• The idea is at the end of the week all those sticks have to be moved to the “Done” side. That way, everyone in the family knows if they have been accountable to accomplish the things they have been assigned.

• There could also be rewards that accompany this. Sometimes it could be just a “job well done” or sometimes there could be something bigger like an ice cream involved. On the flip side, there could be more chores added if popsicle sticks remain in the “To Do” envelope!

Establishing this kind of personal responsibility at an early age will prepare them to live as good family members and good citizens in the future. It may be tough to start, but this type of system casts a vision for a strong and united family.

Questions for Discussion:

• What are the daily chores that make a household function that you can assign to your kid's popsicle sticks (or whatever visual method you choose)?

• Does every member of the family have something they contribute to the daily function of your household? What benefits do you see when your children contribute? How do your kids respond? What is the biggest difficulty in making this happen, and how will you overcome it? 

Teach Kids to Work with Excellence

Finally, another very important lessons that is teaching your kids to work with the highest standards of excellence. This is not only preparation for work outside the home, but it also honors God, the One to whom we ultimately report.

 Dorothy Sayers, a British writer in the early 20th century, said, “The church’s approach to an intelligent carpenter is usually confined to exhorting him to not be drunk and disorderly in his leisure hours and to come to church on Sundays, What the church should also be telling him is this: that the very first demand that his religion makes upon him is that he should make good tables.”

So, as Tim Keller once quipped, at the very least what does it mean to be a Christian airline pilot?

Land the plane.

What does it mean to be a Christian ditch-digger?

Dig the best ditch possible.

What does it mean to teach your kids to be Christian students? On one hand, to make it known that they are a believer in Jesus on their sports teams and clubs. However on the other hand, how well they do their schoolwork is a statement about the glory of God. The quality of homework, papers and assignments is a reflection of them as a representative of God because before they do them for their teacher or you as their parents, they do them for God.

Doing work with the highest standards of excellence is something that is supposed to set apart Christians from the rest of the world.

Paul also said in 1 Corinthians 10:31, “So whatever you eat or drink, or whatever you do, do all to the glory of God.” So whether your kids are mopping floors, or making their beds, or mowing the grass, they are doing it to show how worthy God is of their very best offerings.

So other than teaching and modeling excellence, how can you put this in practice?

Consider posting a “help wanted” ad at home:

• If there is a particularly hard job to be done at home or a job that you might typically hire someone else to do, post a want ad on your refrigerator.

• Describe the job and what you are willing to pay for it.  As an example: mowing the yard. If you don’t have time or if you just don’t want to do it, you let your kids know how much you are willing to pay for it.

• Define your expectations for how the yard should be done, how much they would get paid, and when they would get paid.

• When you hire them, hold them accountable to do it as if they were working for someone else. This would be for big things like yard work, full detail on cars, moving furniture. 

What you are doing when teaching your kids to work with the highest standards of excellence is that you are both preparing them to work outside the home for a successful career and for a trajectory that honors God in their work.

These lessons are just ideas that are customizable, but they are principles that work.  They instill confidence not only in your kids, but they can also instill confidence in you as you know you have taught your children what it means to be financially responsible.