I hope you now have some ideas on how to teach your children about money. The lifestyle method is most appropriate for young children, but effective at every age. By the time your children approach junior high, you should be moving toward more concrete instruction, either with assistance from others or by carving out time yourself. You’ll never be sorry you spent time instructing your child in this very important area.

What Do I Teach Them?

Now, of course, you need to know what to teach! I’m going to give guidelines based on the age of your child. For most babies, the first word is “Dada.” Frequently their second word is “no,” followed closely by “mine.” During the preschool years, your main goal is to deal with the word “mine.” You know how 2 and 3-year-olds can be. They think, “If I touch it, it’s mine. If I see it, it’s mine. If I want it, it’s mine.” You need to deal with that attitude young, or they will become boomer-rang kids and think that your retirement income is theirs! The lifestyle method is very effective with young children. My friend Larry illustrates this principle well. Larry took his four-year-old daughter Heather to McDonalds. While eating lunch, he would reach across the table and take a French fry. Naturally, Heather screamed, “Mine!” Larry would ask her, “Who gave you those fries?” Then he would talk about how everything we have is from God and how we don’t own anything, but are only managers of what God entrusts to us. McDonalds is an excellent place to start lessons on stewardship.

By elementary age, children need to understand the divisions of money. Teach them that they can do three things with money: spend it, save it, and give it away. Crown Ministries sells a bank with three compartments to teach this to children. The bank has a store, a church, and a bank. Children should be encouraged to divide their money into these areas. I encourage divisions of 50% spending, 40% saving, and 10% giving for elementary age children. You can make a bank on your own using boxes or envelopes. The main point to teach is that not all money is for spending. Some must be saved and some given back to God’s work.

Elementary age is also a good time to give your child large doses of vitamins. By that, I don’t mean nutrients for their physical growth. Rather, their character needs two particular vitamins. Vitamin N is hearing “no” a lot, and Vitamin DG is the all-important Delayed Gratification. It is very important that children get doses of Vitamin N when they are in the grocery store and ask for things that are not good for them. They also need lots of Vitamin DG when they want the latest gadget or toy now, without a birthday or Christmas in sight. A friend of mine had a daughter who wanted a very expensive doll, costing about $100. The parents didn’t think they should spend that much money on a doll and told her so. Instead, they did give her a big dose of Vitamin DG. She saved up her allowance and birthday money for about a year, and then she bought the doll herself. The lesson was extremely valuable for that girl. She treasures the doll because it took so long to get it. Please don’t be afraid to dish out Vitamins N and DG. It will build stronger adults! Remember, that’s the goal!

By the time a child reaches 11 or 12, they should be getting an allowance. Allowances do not have to be in cash. Let your children practice managing part of the family’s money with special accounts. For example, when my daughter was 12, she was given a certain amount as an annual clothing allowance. I actually purchased the clothes, but she tracked her spending and had to keep it under the prescribed amount. Another area to set up an allowance amount could be entertainment. Your children could manage how they spend their entertainment or leisure money. If they spend too much on one thing, they won’t be able to afford something else. Let them fail. It’s better to learn now than when it’s real life.