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Teaching your kids about money - managing finances God's way

Pastor Chris Goulard, Saddleback Church Pastor of Stewardship
Christian Stewardship Network

Chris Goulard likes to talk about money. He talks about investing money, spending money, making money, and saving money. He also talks about sharing it. Generously. He teaches seminars based on living on 50% of what you earn, saving 20%, and giving away 30%. WHAT? This is a difficult concept for adults, let alone kids - especially kids today who are taught that the world revolves around them and they deserve whatever they want... right now. Pastor Chris has a different way, a better way. How do we teach our children to grow up with a conscientious, "global" way of thinking about money... and others?

In their "Teaching Your Kids About Money" seminar, Pastor Chris and David Briggs point to 8 keys to raising financially healthy kids:
1. Model healthy finances
2. Prepare them for "battle"
3. Protect them from materialism
4. Stress ownership and ramifications
5. Teach them how to budget
6. Stress work as normal and healthy
7. Model generous living
8. Show them God's perspective of money

Here are my takeaways from the 90 minute seminar I attended. First off, Chris invited us to reflect on our own spending as parents. What are we showing our kids in the way we manage our finances? Would you want your own children handling money the way you do when they are adults? What do you want them to imitate? What would you NOT want them to imitate? When we ask ourselves these questions we can work on preparing our kids to be financially healthy adults, rather than the all-too-common current model of instant gratification, overspending, and dependence on credit and borrowing, only to declare bankruptcy to "solve" our spending problems.

Practice what you preach. Kids learn by watching you and what you teach them, so do both! Talk about your own finances and begin living within your means if you don't already. Stop overspending, stop living a lifestyle you can't afford. If you are having trouble doing that, point out your mistakes and admit you have spending issues. Talk through it with your kids - what can you work on? What are you going to try to do better as you get your finances on the right track?

Parents hate talking to their kids about sex, drugs, and money. Talk about money! It's not as bad as you think! Kids need to understand the "real world" ramifications of financial irresponsibility! Walk them through paying your bills, show them what it costs just to live! Discuss the danger of credit cards with high interest rates. Show them your paycheck and help them understand the breakdown of gross pay, taxes, retirement, and what actually goes into the bank!

Pay your kids an allowance. Be consistent and be fair. You and your child can decide if you want to use a salary method or commission method... or a combination of both. Whichever method you choose, you can give them household chores to earn their pay. Household work can be broken down into three categories:
1) Mandatory for no pay. As a member of the family, there are some chores that are expected just because you live there. Set the table, take dishes to the sink, make your bed are just a few examples.
2) Mandatory with pay. This is work that is expected but will be paid for doing. Examples are mowing the lawn, washing the car, sweeping the garage, etc.
3) Voluntary with pay. These are optional/extra jobs that can be done for pay. Washing windows, cleaning out the refrigerator, painting a fence, etc. are some examples of work that can be done for "extra" money. Voluntary jobs should always be plentiful and available. As kids ask you for money, there should always be an opportunity for them to earn it themselves rather than getting handouts.

If a child doesn't complete a job or does it poorly, do not pay them. Kids should learn at a young age to complete a job and do it well, as this will be expected as they become adults. Allow them to take pride in "a job well done"! Teach them that work is a part of life.

Rather than buying your kids everything they want, let them experience the thrill of looking forward to something. Let them save up for it themselves! Not only will they appreciate it more, but they will probably take better care of it because they had to work for it. Give them a budget for clothing or birthdays. A few years ago my daughter wanted a $100 birthday cake. The rest of her self-planned party was a relatively inexpensive pool party but I just couldn't justify spending $100 on a CAKE. But I realized at her age (9 years old) I didn't want to just tell her, "no that's a waste of money", I wanted to show her how to make better decisions in the future. So beginning that year (and ever since), we have given our kids a "birthday budget" so they can decide what is important to them for their birthdays and they can plan their own parties within this budget. Oftentimes kids have no idea that a bounce house facility costs $300 just for the rental fees! Add pizza, utensils, balloons, cake, presents, goodie bags for the guests... there's no limit to what parents can spend on a birthday party for an 8 year old! But if you tell them, "we have $350 to spend for your birthday this year. What is most important to you?" Some children may want to skip the party and pocket the $350 and that's OK! For my daughter it was a great exercise in spending as she put a lot more thought into her party - she wanted to give her guests nice "thank you gifts" so she spent more on them than I would have, but she opted not to get any balloons or party decorations. And she DID end up choosing to get that expensive cake... but as she mentioned to me later "Mom, that cake was totally worth $100." (I agree, it was awesome - and I'm also happy to say that was the ONLY year she spent $100 on a cake...)

Let kids make mistakes. Too often we step in to rescue our children before they hurt enough to learn a lesson. With finances, let them learn the "hard way" while they are still young and a lesson involves not being able to buy a video game, rather than not being able to purchase a home. Teach them to budget. Teach them to control their money rather than letting their money control them. I love Pastor Chris' budgeting system. Sharing doesn't come naturally for kids, but if you get them in the habit of setting aside a percentage of their earnings for saving or sharing, it will become so natural that it will seem like the "normal" thing to do. Chris recommends putting 30% aside for giving, 20% aside for saving, and 50% for spending. Breaking that down even further involves Giving: 10% to church, 10% to charities, 10% for gifts (birthday, Christmas, etc.); Saving: 10% for short-term savings and 10% for long-term savings, and Spending: 50% discretionary spending. Imagine if all of our children grew up in the habit of only spending 50% of their paycheck to live! What if as adults they actually bought a car with their long-term savings rather than taking out (another) loan? What if we could teach our kids to live off their earnings rather than off high-interest credit cards?

Finally, model gratefulness and generosity. How can we expect our kids to be thankful and generous if we are stingy and ungrateful? When we show our kids how much FUN giving can be, they learn that giving is not an obligation but exciting and natural. When we have so much, how can we use our resources to help others rather than competing with our neighbors and wanting more? Money can't buy happiness, but teaching kids to live within their means and be generous with their money are gifts you can give to your children to prepare them for a lifetime of financial responsibility. This will bring joy to them and all those they touch with their giving.

Are you interested in learning more about financial freedom and how to manage your money? Attend a FREE seminar in Lake Forest:

January 15, 2014: Estate Planning - Trusts, Wills
January 18, 2014: Estate Planning - Trusts, Wills
February 27, 2014: God, Money and You
April 1, 2014: Teaching Your Kids About Money

For more information or to register for a seminar, click here or visit http://saddleback.com/events/eventsearch.aspx?keyword=FINANCIAL

About Pastor Chris: In early 2004, Chris “retired” from a successful career in the financial services industry and joined the staff of Saddleback Church as the Pastor of Stewardship. In this role Chris directs the ministries of Saddleback that focus on biblical financial stewardship, all of the financial workshops and curriculum at Saddleback, and leads the church’s food pantry and benevolence ministry. For more information contact Financial Freedom Ministries at 949-609-8224 or FinancialFreedom@saddleback.com.

About Dave Briggs: Dave Briggs is the Director of the Stewardship Ministry at Central Christian Church in the greater Phoenix area. Prior to joining the staff at Central, Dave held a similar position for seven years at Willow Creek Community Church near Chicago. In 2002, Dave left a 27 year career as a finance manager with General Electric to follow his passion for teaching Biblical principles of handling money. Dave has a love for teaching and a desire to help train church leaders to establish thriving sustainable stewardship ministries. Dave and his wife Debbie have two married sons who are both currently serving in ministry in Philadelphia and Colorado Springs.