5 Essential Money Principles to Teach Your Kids

When is the best time to begin teaching your children the value and principles of managing money? From the time your child is born you have an opportunity to model the process and benefits of walking out financial responsibility. At the same time, there is a time when you need to begin teaching these financial principles to your children. For our family it began when our two daughters (now ten and eleven years old) were five. I began introducing simple financial principles to them on their fifth birthday by giving each one her own new savings container. It had three openings each labeled appropriately for savings, spending, and tithing. Their beginning allowance was one dollar a week. Any additional birthday or Christmas cash was also deposited into their savings “bank.”

The consistency of sitting with Dad every Saturday morning and receiving their allowance began to embed into their very young minds financial truth. Just as I am teaching my children I have included below the five simple principles I also encourage you to teach your children.

1. Ownership

Show them God has created everything in this world and they must look to him as the source for all their needs. Helping them to understand submitting to his authority in the area of money allows them to live a life of peace within their heart and mind.

2. Stewardship

Teach them as a manager or steward it is their responsibility to submit to the owner as they will be accountable for their efforts. With time they will understand he wants them to become a conduit so he can utilize all of his resources through them.

3. Tithe/Save/Spend

The simple principle of tithing 10% first, saving 10% second, and living within the remaining eighty percent should be the starting line. As your children begin to grasp this concept encourage them to increase the tithe and savings as their faith, knowledge, and self -discipline increases.

4. Earning Capacity

Help them by encouraging them to imagine themselves as a money-machine they will deposit money into on a weekly basis. They need to understand for the rest of their life they will earn money for services provided. As an adult the average person will earn over one million dollars in their lifetime. Therefore, understanding the tithe, save, and spend principle will help them understand the management of money is as important as the earning capacity.

5. Interest

Show them how their money can make money for them as they understand the principle of simple and compound interest. The more their money makes the less they have to deposit into their money machine.

It has been a joy to see my two daughters slowly mature over the past few years in the area of finances. Trips to the toy store have provided the perfect classroom for their young minds to grow in wisdom on choices, payments, and delayed gratification. It is also a learning experience when they see their family make tough financial choices as they see how by faith and discipline the family will make necessary adjustments using strong principles. Communication during these moments helps them to understand the importance of the necessary changes and the positive impact it will have for the family’s finances.

Maybe you are a parent of an older child and feel you have waited too long to begin this journey. If you have not yet started it’s not too late! Begin immediately as the perfect time to start anything new is now. God shows us in his word our responsibility: 

“Start children off on the way they should go, and even when they are old they will not run from it” (>Proverbs 22: 6 NIV).

When you teach your children to walk out with intention financial responsibility you are literally giving them a gift that will keep on giving. As you model this example in front of them you are creating a lasting financial legacy. God will honor your faithfulness and obedience and you will see fruit harvested for multiple generations.

Guy Hatcher – known as The Legacy Guy – has spent his lifetime helping families plan their legacy. His new book, Your Future Reflection: How to Leave a Legacy Beyond Money, is now available at amazon.com. Follow him on twitter @guyhatcher or contact him at www.guyhatcher.com

Publication date: November 10, 2014

Photo credit: ©Rostock-Studio