11 Ways to Teach Financial Independence to Children of Every Age

Editor's Note: The following is a report on the practical applications of Steve and Annette Economides’ book The MoneySmart Family System: Teaching Financial Independence to Children of Every Age (Thomas Nelson, 2012).

No matter how old your children are, two factors will always play a part in your relationship with them: love and money. One of the most loving lessons you can teach your kids is how to become financially independent. That vital skill is too often neglected by parents, resulting in stress that God doesn’t intend for them or their children to go through. Children who haven’t been taught to become financially independent adults put pressure on parents to give them money they should be earning themselves, and parents resent spending money they can’t afford.

If you manage money wisely and train your children to do the same, you can empower them rather than enable them. Then the financial connection that you’ll always share with them will be healthy, freeing you all to enjoy respectful and peaceful relationships with each other.

Here are 11 ways you can teach financial independence to children of every age:

Forget about allowances. Don’t give your children allowances (money paid to them on a regular basis simply for being part of your family) because allowances promote an attitude of entitlement, which is detrimental to the values of initiative, creativity, and productive labor that you need to teach your children to become financially independent.

Pay your children based on points they earn for completing weekly tasks. Help your kids learn the real world work skills they’ll need to use when they grow up by having them earn money according to how successfully they complete tasks at home. Set up a time card for each of your children, and every week, record whether or not they successfully completed certain daily tasks for which they can earn points, which translate into an amount of money from you at the end of each week. Pay each of your kids a fair amount that you can afford to pay consistently. As your children’s abilities and responsibilities increase, raise their pay accordingly. Pay your kids in cash until they get their first jobs as teens; then convert from cash to a checking account or a debit card system.

Teach them to perform morning tasks well and earn points for their efforts. Your kids can earn a “morning point” each day that they get through their daily routines with good attitudes – no complaining or procrastinating. Tell your children that you expect them to get up on time, get dressed, practice good hygiene, eat breakfast, and clean up after the meal. Every day that they do all of that successfully, record a morning point on their time cards.

Teach them to perform schoolwork well and earn points for their efforts. Award your kids a “school point” every day that they do their best on their schoolwork, following instructions and completing it on time with good attitudes. Keep in mind that you should reward discipline and attitude more than academic performance in order to encourage each of your kids – who may have differing abilities – to simply love learning.

Teach them to perform household chores well and earn points for their efforts. Your children can earn a “chore point” each day that they successfully complete chores around your house that you assign them according to their ages and abilities. Train each of your kids to complete chores – from doing laundry and dishes to taking care of pets and mowing grass – as instructed, on time, and with a good attitude. Follow up after your children do their chores to inspect their work, coach them on what needs improvement, and praise them for work that they’ve done well.

Teach them to round up their daily work well and earn points for their efforts. Every evening, work with your kids to round up all of the necessary daily tasks that you all haven’t gotten to earlier that day – and if your children cooperate well with you, they can earn a daily “round-up point.” Clean up messes around your house together, and get organized so you’re prepared well for the next day.

Give them opportunities to earn extra points by showing initiative. Whenever any of your children recognize a task that needs to be done and do it without being asked, reward him or her with an extra point on that day for showing initiative.

Encourage them to give generously. Urge your kids to give about 10 percent of the money they earn to help others, such as by donating to your church or a favorite charity. Encourage them to give their time as well as their money, through volunteering in your community. You can also teach your children fundraising skills by helping them organize events such as yard sales and silent auctions to support groups such as their extracurricular organizations. Help your kids see that even the simplest ways of giving – such as giving some kind words to a sibling or friend – still has a significant positive impact.

Show them how to save consistently. Explain to your children that they should aim to save about 20 percent of the money they earn. Help them set goals for specific purchases they can save for – such as a toy or a trip to an amusement park – and then encourage them to gradually accumulate the money by saving a portion of their pay from you every week. Tell your kids about your own savings goals over the years and how satisfied you felt when you reached your goals without having to go into debt to make those purchases. Teach them about the power of compound interest to increase the money they save, versus the danger of paying interest on borrowed money.

Teach them how to spend wisely. Help your kids manage their money so that they spend only about 70 percent of what they earn each week. Urge them to avoid impulse buying by keeping a “wish list” of items they think they’d like to buy want then waiting about 30 days before actually making the purchase. That will give them time to decide if they really do want each item, and to research the best price if they do purchase it. Teach your children how to create and maintain a budget and how to build establish credit without going into debt. Never cosign any loans for them.

Help them develop responsible work habits. Teach your children how to prepare for productive careers and urge them to work part-time jobs as teens. Refuse to bail them out of expensive mistakes; let them experience the consequences and learn from their mistakes as a result.

Adapted from The MoneySmart Family System: Teaching Financial Independence to Children of Every Age, copyright 2012 by Steve and Annette Economides. Published by Thomas Nelson, Nashville, Tn., www.thomasnelson.com.

Steve and Annette Economides are hailed as “America’s Cheapest Family.” With their amazing tools for saving money and their personal story of living debt free, they are showing families everywhere how to live the American dream without debt. They have five children. To learn more, visit www.AmericasCheapestFamily.com.

Whitney Hopler, who has served as a Crosswalk.com contributing writer for many years, is author of the Christian novel Dream Factory, which is set during Hollywood's golden age. She produced a site about angels and miracles for About.com. Now she writes about the power of thoughts on her “Renewing Your Mind” blog. 

Publication date: November 24, 2014