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Teaching Our Kids About Money

As parents, one of our responsibilities is to educate our children. Although we spend the better part of 18 years trying to instill our values and our knowledge in them, we often overlook a vital part of their education — how to handle money responsibly. Here are some pointers for introducing your children to the basic stewardship tenets of money: earning it, using it, investing it and sharing it.

Earning it. Children need to understand that everyone in the family has a job. Their responsibilities change as they get older, but they receive an allowance for the completion of their assigned task. There is a great life lesson in knowing that with hard work you can purchase something you want — and that you may have to wait for that purchase to happen.

Using it. For young children, start with the basics of what money looks like and the names of the coins. Later you can move to the cost of items and the concept of needs versus wants. Explaining the value of an item versus the price of that item helps older children determine if something is a good use of their resources. Help them to develop their own personal budget and allow them to be responsible for some expenses. As they reach high school, you can begin to teach them about the proper use of credit cards and the danger of reckless borrowing.

Investing it. School-age children can understand the concept of saving. At that age you can begin to explain the idea of earning interest on what they save. Opening a bank account will help them learn to regularly deposit what they save. As a family, you can discuss articles in the newspaper or on TV that discuss the stock and bond markets or investing. Specifically, children need to be familiar with basic concepts of investing their money, such as diversifying investments (using more than one type), to manage risk, saving consistently over time and the benefits of compound interest to help their money grow.

Sharing it. Last but not least, our children need to realize that it is our responsibility to share a part of what we have. In order to teach a sense of social ethics, we need to model charity ourselves — either through giving money, our time or donating part of what we have. Teaching children that the first tenth of all we earn should be given to the Lord should be an integral part of every Christian parent’s legacy.

It’s up to us to teach our kids to be responsible stewards of money. It will take a consistent effort on our part, but it’s a lesson that will serve them well throughout their entire lives.