It’s never too early to teach your kids about money. Cliché? Yes. Truth? Also yes.
So with tax season over and many parents’ pockets a little heavier thanks to Uncle Sam, is it time to set aside a little bit of that money to give your kids an allowance?
Personal finance and investment expert Dave Szafranski says giving your kids allowance is totally up to the parents, but if you want your kids to learn how to handle money, they need to have money to work with.
Once a kid has figured out a way to make some money (whether it’s getting a job or just doing extra chores for mom and dad), there are three things Dave says parents need to teach their kids about money:
Plan for the future
Dave says kids must learn how to budget their money. Early. He also says kids need to work for their money because,
“They realize their was a cost to [work]…if they give away all their money right away, they’re going to realize, ‘oh, I’m going to get that bicycle or guitar’…everybody has to be on a budget.”
As Christians, Dave says we also need to impress the importance of giving — and giving generously. Yes, tithing is considered to be about 10 percent of your gross income, but Szafranski adds that to really “get” giving, you have to change the heart:
“That is not an easy thing to do. It’s not natural to want to give your money away…[but] we’re commanded to do that.”
He reminds us of Paul’s words in 2 Corinthians 9:6:
“Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously.”
He also adds that usually the first 10 percent of your gross should go to your home church, but if your kids decide to go above and beyond, encourage them to give to mission organizations that interest them.
Dave says we should remind our kids that managing money is a privilege that not everyone gets. With privilege comes responsibility, and with responsibility comes risk; especially with money. Dave says we need to let our kids learn consequences, should they choose to manage their money poorly:
“If my kid wanted to go outside without a coat on and it was 12 degrees, my wife would be mad at me, but I’d let him…he’s going to find out really quick, ‘it’s cold out here, I need a coat.’ Sometimes we need those natural consequences to be instilled in them…[with money], this is why you need to teach this when they’re young, so that the natural consequences they feel as a child are much smaller than they would feel as an adult. The natural consequences as an adult could be a home foreclosure…or car repossession, or not having enough money to pay for groceries.”
As a final reminder to parents, Dave says:
“Somebody is going to teach our kids about money. It’s either going to be you, or the world.”
You can hear Dave’s full interview on Faith Radio Mornings below:
Dave is the branch manager and founder of Edgewater Investment Group in the Cleveland, OH area. He is degreed in economics and schooled in finance. He’s a registered financial advisor with the National Football League Players Association and has spent 10 years in the United States Army, becoming a decorated soldier and demolitions expert.