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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.

Age 9-12
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.

Teen years
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).

Conclusion
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.

Teach by example that God owns it all. Parents need to demonstrate that they’re willing to put aside indulgences and personal wants in order to meet the needs of the family and others. Parents should let their children see them pray for God’s provision concerning material needs and let the children know that borrowing is not God’s best for the family.

In addition, parents need to show by example that the tithe is the first thing that is faithfully paid out of every paycheck. This will instill in the children the principle of tithing and giving back to God the firstfruits of their income. Then, as soon as they begin to receive money, children need to be encouraged to pay the tithe first.
Exercise self-control. There’s no way parents can establish financial discipline in their children if they themselves are not disciplined. Parents should share their budgets with their children and show them how to save money to buy clothes, repair the car, buy Christmas and birthday presents, or take vacations.

Parents need not only to teach but also to practice moderation, regardless of their ability to generate income. God’s instructions require that we exercise discipline in everything we do.
Live on a budget. No matter what the family income is, a budget is needed. Begin at an early age teaching children how to manage their money and how to divide it into different parts.

General training
The family is a community, and everyone in the family shares in the opportunities, responsibilities, rewards, and income of that community.

As part of the family community, children are responsible for certain household duties for which they are not paid. These could include cleaning their rooms, doing dishes, and picking up toys. However, for children to learn the value of money they need to have an income.

Many parents choose to give their children an allowance—especially younger children through preteen years.

An allowance should not be tied to work-for-pay projects. It is strictly money given to children with no strings attached.

Nevertheless, parents need to set allowance guidelines. The allowance should be large enough that the children look forward to receiving it, but it shouldn’t be so large that it takes care of all wants and needs.

They should learn how to save for the things they want. Just like parents receive raises at work, children also should receive allowance raises.

In addition to allowances, parents also should provide paying jobs for their children. These might include mowing the lawn, weeding the garden, cleaning the garage, washing the car, washing windows in the house, and so on. Children should be paid equitably according to what parents are able to afford.

Not only must parents be fair, they also should be firm and insist that their children observe some simple rules.

Pay children only for jobs completed. “He who tills his land will have plenty of bread, but he who pursues worthless things lacks sense” (Proverbs 12:11). For children to learn the value of being paid for work done, parents should not pay them unless all the work has been completed that they had agreed to do. In other words, parents must avoid paying 50 percent for 50 percent of work completed.

After the work they had agreed to do for a certain amount of money is complete, they should be paid the full amount. Nonetheless, parents need to reward exceptional or extra (more than what was agreed upon) work with bonuses.
Pay for quality work. “Whatever you do, do your work heartily, as for the Lord rather than for men” (Colossians 3:23). Children should understand that they will be paid for work well done. This does not mean that they have to do things perfectly; they may not have the ability to do things as well as adults. It does mean they need to do the best they can do and take pride in their accomplishments.
Pay fairly within the family budget. Parents must pay their children a fair wage but not be excessive. Paying children too much for work likely will cause a distorted value system after they get older.
Encourage sharing. Encourage children to set aside a portion of their wages to give to missions, the poor, or to other worthy causes. This is in addition to the tithe.
Encourage saving. “There is precious treasure and oil in the dwelling of the wise, but a foolish man swallows it up” (Proverbs 21:20). Parents can discourage debt by encouraging saving.

Children who learn how to save for the things they want, rather than having parents get them by charging, will as adults be more inclined to save for wants, rather than going into debt to get them.

Govern spending habits
One of the best things parents can do for their children with regard to financial discipline is to establish some ground rules that will serve to govern how much money they will receive and how they are allowed to spend it.

Nevertheless, these rules cannot be too restrictive; parents should want their children to experience the freedom of spending their money on what they want to buy. In addition, this will give them room to make occasional mistakes in their purchases—mistakes they can learn from later.

Children should think hard about spending choices, but their mistakes should never be over-emphasized. Rather, when parents see their children make wise buying decisions, it is time for plenty of praise.

Conclusion
With regard to financial management, parents’ goals should be slowly to develop financial discipline and wisdom in their children.

It doesn’t happen overnight; but, with consistency the seeds of responsibility that parents sow will eventually take root in the lives of their children and will yield results in their future financial dealings.

For more information concerning practical guidelines for teaching children financial responsibility see Part 2 of Children and Finances.

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.

Spiritual reflection
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
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).

Bookkeeping
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.

Conclusion
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?

Self-discipline for parents
It will do no good to teach financial discipline to children until the principles are real in the parents’ lives. The adage, "Don’t do what I do, do what I say," doesn’t work. Parents must set examples for their children. Rather than prolong this report on what parents should or should not do in their finances, we will leave it there.

Where to start?
Decisions about developing financial discipline in children must be made by both husband and wife. Start with a conference on family goals. Then, have a family session where the children can input their ideas and objections. Show them your willingness to compromise without losing sight of the fact that your goal is to teach God’s financial principles.

Be sure the plan covers the following elements.

Savings
Savings should be tied to a future event or purchase, such as buying a bike or taking a summer trip. This allows the results of the savings to be seen and enjoyed.

Budget
From the earliest stage of a child’s earned income he or she should be on a budget. In a very young child, the budget may just consist of a portion given to God and the rest rationed out for a week. By adolescence, the money is divided into normal categories, such as tithe, clothes, entertainment, and college. By the teenage years, the budget should include checking and savings accounts and the associated bookkeeping. By graduation, parents should have full confidence that their children can function in a paper money society without borrowing to exist.

Tithe
Explain that giving is a blessing and a demonstration of surrender to God’s authority. If it’s possible, arrange for your children to see the end use of the money they give. Try to have the church give the money to a specific family or missionary and help your children communicate with the recipient. Difficult? Yes, but the rewards last a lifetime.

Borrowing
The vast majority of people will borrow money during their adult lives. Parents can teach their children the realities of debt by allowing them to borrow according to a rigid repayment plan with interest. The purpose is to demonstrate the realities of borrowing money. Remember that if you don’t do this, eventually a creditor will. "The rich rules over the poor, and the borrower becomes the lender’s slave" (Proverbs 22:7).

Desires
Balance the discipline with love. God says that if we delight ourselves in Him, He will provide our heart’s desires. As your children delight in you (honor and obey) be willing to bless them accordingly. This will demonstrate that your discipline is truly an act of obedience to God’s Word.

Conclusion
The financial pressure placed upon young adults is impossible to resist unless they have been armed with an unshakable source of strength--God’s Word. As parents, it is our responsibility to teach our children the rules of self-discipline. "Train up a child in the way he should go, even when he is old he will not depart from it" (Proverbs 22:6).

By Crown Financial Ministries

Responsibility of the parents
Parents are called by God to be the teachers of their children. It is not an option. It is a biblical admonition. Parents need to teach, encourage, and guide them faithfully. But when parents make decisions for their children and push them, they misuse their influence, which could result in alienating the children. Biblically speaking, parents have been given a special trust to serve as stewards or managers of their children. Unfortunately, some parents view their role as owners rather than as stewards, an attitude that causes many parents to have problems and conflicts with their adult children.

Even though parents are called by God to be teachers of their children, they are not responsible for the decisions their children make. Each person is held accountable individually. However, parents will be held accountable for their children’s instruction and training. As such, there are three basic principles that are applicable to adult children.

Adult children need to understand God’s principles. They need to know that they can trust God to take care of them, that He can meet their needs, and that He can be trusted to work out their finances. “Where there is no vision, the people are unrestrained, but happy is he who keeps the law” (Proverbs 29:18).
Love adult children but do not coddle them. “For whom the Lord loves He reproves, even as a father, the son in whom he delights” (Proverbs 16:26).
Allow adult children to fail. Sometimes parents must allow their children to fail. Some of life’s most valuable lessons are learned because of trying and failing. Love them enough to allow them to fail so that they can learn from the failure.

When and how to help
Larry believes that too many parents attempt to buffer their children financially. This usually makes the problem worse. He cautions parents not to give their children more than they can handle. Let them know that more money won’t help them change their spending habits, which is what must be done. Parents may have the greatest motives for helping their children, but sometimes they encourage them to be dependent on parents rather than on God. If God is trying to teach the children discipline and parents step in, the children may have to go through it all over again. Parents sometimes have to take upon themselves the role that God has often taken with His own people: allow problems to come into their lives and withhold finances to increase their dependence on Him.

Although there is nothing wrong with helping adult children if they are truly in need, if the income is adequate and it is being mismanaged, parents need to let their children know that although they love them any financial help must be contingent on the children establishing a workable budget and getting good counsel to help implement it. Parents need to be cautious, however, and allow God to lead them in a manner that will not thwart His purposes in their children’s lives.

Whether parents should direct some of their assets toward the home mortgages of their children is one situation for which parents will need some wisdom and discernment from the Lord. There is nothing unscriptural about helping adult children purchase homes, but parents have to weigh the personalities, abilities, and attitudes of their children to ensure that they do not spoil the children. The ministry believes it is optimal for every family to have a debt-free home; so, helping adult children purchase a home can be a great blessing to them if parents can afford it. But they must be sure that they are not trying to control their children’s lives. If the adult child is a married daughter, parents should be careful not to usurp her husband’s authority. If stepping in will cause the son-in-law to feel that he is an inadequate provider, parents may need to back away.

Nevertheless, parents today can have a major impact on the futures of their children by assisting them with the purchase of a home. Often times the children can make the payments that a mortgage loan requires, but they have difficulty meeting the down payment and the many closing costs.

A way for parents to help their children purchase a home is to give them money toward the down payment. Most banks demand that this help be in the form of a gift, not a loan. In most cases, unless the gift equals 20 percent of the sale price, the lending institution will demand that the child contribute at least 3 percent of his or her own funds. If the parents are able to give 20 percent, the child does not have to contribute money to the down payment, but the parents may face difficult tax consequences as a result, because the IRS has very specific requirements for cash gifts to family members.

If the child is getting an FHA-insured mortgage loan, he or she can use gifted money from parents for 100 percent of the down payment and closing costs. Even if the parents' gift is less than 20 percent of the purchase price of the home, the child can use all of it to pay the down payment and closing costs.

Conclusion
It is never too late for parents to begin teaching their children about finances—particularly God’s principles of handling money. If parents find that their grown children are having financial difficulties, this may be a good opportunity to help them get good counsel and make their financial help to their children contingent on the children establishing a workable budget and seeking good counsel to help implement it.

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