|By Crown Financial Ministries|
|Part 2 of 2 parts
“Train up a child in the way he should go, even when he is old he will not depart from it” (Proverbs 22:6).
In Part 1, we discussed the general guidelines that parents need to follow when teaching their children how to exercise responsible financial management.
In Part 2, we will discuss specific guidelines relative to particular age groups of the children, taking them from pre-budget to full budget by the time they are living on their own.
Age 8 and under
As soon as children are old enough to understand what money is and to receive and spend it, they are ready for a pre-budget.
This pre-budget should be a model of simplicity that encourages children to begin to divide their money into different categories.
Parents can begin by setting up three piggy banks: one for Giving (tithes), one for Savings, and one for Spending. They then can divide the children’s allowance or earned money (during this age period most of their money will be an allowance) into three equal parts and have the children place equal amounts in each bank.
By age 6 or 7, children should be taught the concept of tithing, or placing ten cents out of every dollar into the giving bank. The remainder should then be divided so that 50 cents of every dollar would go into the savings bank and 40 cents into spending.
To make budgeting easier for the children, parents should give them their allowance in increments that are easily divided. As an example, give them four ones and change rather than a $5 bill.
Each time parents give their tithe, children also should give the money they’ve placed in their giving banks.
Money placed in spending banks is to be used to buy the things the children want and which parents should not buy for them. These would include small toys, baseball cards, gum, and so on. However, they need to understand that once those funds are gone they are not permitted to take from the giving or savings banks to buy items they want.
Money placed in the savings bank is for the purpose of attaining a certain goal. That goal should not be so far removed from the present that they feel it is unattainable, but it also should be far enough down the road that saving is necessary if the goal is going to be met. Examples would be saving to attend a ball game or go to an amusement park, for extra money to spend at summer camp, or to buy a special gift.
By the time children reach the age of 9 they should be ready to move into a mini-budget.
With this mini-budget, expenditures and income should be recorded in a small notebook. This budget is a little more complex than the pre-budget: 10 percent is allotted for Tithes, 25 percent for Short-term savings, 25 percent for Long-term savings, and 40 percent for Spending.
Short-term savings should be for something for which they will have to save from three to six weeks.
Long-term savings is for something they will have to save for three to six months, or longer, if they choose to save longer.
The goal with this mini-budget is to get children into the habit of keeping tabs on their finances and saving for both short-term and long-term goals.
It is also during this age period that children should be encouraged to supplement their allowances with work (inside or outside of the house) for which they would get paid.
By age 12 it should not be unusual for more than half of their income to be generated from paid work.
These are critical years for children—the transition years to adulthood.
By this time the basics of personal finances and budgeting should be understood by children and are being applied.
Written records (including checking accounts by age 16) and budgets should by now be a fundamental part of children’s financial planning. These budgets should be categorized into Tithe (10 percent), Taxes (5 percent), Short-term savings (25 percent), Long-term savings (25 percent), Expenses (10 percent), and Spending (25 percent).
The new Taxes category is designed to prepare children for paying taxes, without actually getting the government involved.
Parents should set up a “bank” into which the children will deposit their tax money. Parents may want to add matching funds to the “bank.” This money cannot be spent before an established amount has been accumulated. Then the family can decide how the money should be spent. However, contributions to the fund do not end; they just start over again.
The new Expenses category is intended to prepare children to pay utilities and other monthly bills.
Parents need to figure what 10 percent of their children’s income will be and then find a monthly bill that matches that amount. It could be a portion of the phone bill, cable television bill, magazine subscriptions, and so on. When the bill arrives each month, the children’s allocated 10 percent will be used to pay the bill.
Within limits, children in their teen years, especially from 16 to 20 years, should be allowed to make their own financial decisions.
Certainly, these decisions will vary by age and personality, but the more opportunity parents allow, the clearer picture parents will have of whether the children are ready to be financially independent.
These decisions become notably applicable when children start working outside of the home, at which time parent allowances should stop.
With maturity comes added responsibility. Therefore, parents need to allow their children to share in the financial responsibility of caring for expensive items, such as cars.
Parents should insist that their children pay for insurance, a portion of the maintenance and upkeep (perhaps charge them 5 cents per mile, as an example), and all ticket or parking violations (parents might want to consider suspending driving privileges for serious offenses).
Parents are not raising children; they are raising future adults. So, they must not allow their children to leave home without learning and understanding the basic principles of financial management as recorded in God’s Word.
Anything less would be detrimental to their financial survival after they are on their own.
|By Crown Financial Ministries|
|Part 1 of 2 parts
“Train up a child in the way he should go, even when he is old he will not depart from it” (Proverbs 22:6). The Word of God is very specific concerning parents’ responsibility to train their children. Where do parents start?
Where to start
The way to train children is actually very simple. Whatever principles God establishes for parents, the parents should pass along to their children.
The difficulty comes in deciding which principles to teach at what age and how to get children to understand.
However, here are three principles that are applicable both to parents and to children.
Govern spending habits
By Crown Financial Ministries
|When God said in Genesis 2:24, “They shall become one flesh,” He was not just talking about the physical sense. God created marriage as the highest, most honored, most intimate of all human relationships. As such, the husband-wife relationship takes precedence over all blood-kin ties.
God almost always puts opposite personality types together in a marriage, not to frustrate them, but to allow the strengths of each spouse to balance the weaknesses of the other.
However, it is not easy to see beyond the differences and begin working toward common goals as a team.
In the New Testament, Jesus draws an interesting parallel between the way people handle money and the way they handle spiritual matters.
In fact, the way people handle money very well could be the best outside reflection of their true inner values. “For where your treasure is, there your heart will be also” (Matthew 6:21).
God uses money in the lives of any couple to draw them closer together.
In contrast, Satan wants to drive a wedge between a husband and wife. Why? In hopes that the resultant turmoil will drive them away from God.
Ours not mine
In a marriage, there is no “my money” and “your money” or “my debts” and “your debts.” There is only our money and our debts.
A couple cannot be one if they separate their lives by separating their finances.
God will bring a couple closer if, from the very beginning, they establish God’s Word as their financial guide and then follow those principles.
A marriage is not a 50/50 relationship, as many people think. It is a 95/5 relationship on both sides.
Each must be willing to yield 95 percent of their rights to their spouses. If they are not willing to do that, it will not work.
No viable marriage can survive a "his or her" relationship for long, because it is totally contrary to God’s plan.
Couples should avoid having separate financial anything, including checking accounts, because when they develop a his money/her money philosophy, it usually leads to a him-versus-her mentality.
Unwillingness to join all assets and bank accounts after marriage is perhaps a danger signal that unresolved trust issues could still be lingering or developing in the relationship.
Budgeting can be difficult, if not impossible, when spouses do not agree on basic money management principles. Therefore, they should make all budgeting decisions together.
They also need to agree to hold each other accountable for meeting their financial goals, and devise a plan for regular evaluation of how well they are succeeding.
The couple should come to an agreement on the amount of money that can be spent without first checking with each other. The specific amount will depend on the budget category and the couple’s particular circumstances. “Two are better than one because they have a good return for their labor. For if either of them falls, the one will lift up his companion. But woe to the one who falls when there is not another to lift him up” (Ecclesiastes 4:9-10).
Practically speaking, only one person should keep the books.
Even though one person primarily handles balancing the checkbook, both should be fully trained and able to do it.
There is nothing wrong with the wife handling the finances in the family if she is the better administrator, but God still holds the husband accountable for the ultimate decisions.
When there is an impasse, the wife must yield to her husband and allow the Lord to work it out. As they work together, encouraging one another, God will show them His favor and grace.
Nevertheless, being responsible as the leader does not mean the husband is a dictator; the couple should discuss and agree on financial management.
Both spouses should be involved in paying the monthly bills. Doing so will keep both fully aware of their financial status.
Within a marriage relationship the husband and wife are partners who are dedicated to one another.
A bond of uncompromising devotion creates a healthy atmosphere for togetherness: studying God’s Word, praying, and even managing money.
Just as it takes two to make a marriage successful, it takes two to establish a clear line of communication in financial planning.
|By Crown Financial Ministries|
One of the most neglected areas in Christian (and non-Christian) families has to be teaching children financial discipline. Even in families in which Bible study and prayer are an established way of life, finances are rarely, if ever, discussed. Is it any wonder then that so many young couples suffer because of financial mismanagement?
|By Crown Financial Ministries|
Responsibility of the parents
When and how to help