(This article was originally published by Grant on the Stewardship blog here.)
I think we can all agree that teaching children about money is an important endeavor. But what exactly do we teach them? Every parenting situation is unique. Therefore, these steps are not foolproof. However, I think there is value in hearing what a finance professional teaches his own kids when it comes to money.
Money is earned, not entitled.
I do not pay my children an allowance. They don’t get money simply because they are my children. If they want to purchase something outside of my normal provision as a parent—they need to earn it. I believe in this so much in our house, we call money “commission.” If our children see a Lego set at Target that they want to buy, they must work to earn commission to purchase it.
PURPOSE: For my children to understand the value in a strong work ethic. It’s an attractive characteristic that can help in their future careers, schools, marriages, and parenthood.
Sometimes you don’t get paid.
There are certain responsibilities that are part of life. These are cleaning messes you make, doing your laundry, your dishes, and other household chores that are part of being a household member. When my kids are eventually on their own, they won’t get paid to do their own dishes or laundry. As a result, these are tasks they need to do without financial incentive.
PURPOSE: Beyond a good work ethic, I want my kids to have an excellent sense of personal responsibility.
Find needs and fill them.
Helping me tend to the yard is a need. Helping a sibling is a need. Taking over Mama’s chores when she’s having a tough day is a need. When my children step up to work in these situations, they are compensated. More importantly, if they are able to find needs independently and fill them, they are paid. That skill is unbelievably valuable in social settings, especially as an employee or business owner.
PURPOSE: A servant’s heart is valuable. You cannot serve well without genuinely finding needs and filling them.
Sometimes there’s a bonus.
If my kids find a need and fill it without prompting, it’s a BIG deal. As a result, I pay a bonus commission. If they work with an excellent attitude, I tack on another bonus commission.
PURPOSE: Exemplary work and excellent service (attitude) is prized. I want my kids to understand this early on.
Sometimes there’s a penalty.
Let’s say my children Cambria, Parker, and Ellenie are working together on a job. If Cambria complains and chooses to limit her impact on the job, there will be a consequence. When the job is complete and it’s time for the commission, I will have each of them hold out their hand to receive an equal amount. Then, with their hands still open, I will take some commission from Cambria and place it in the hands of Parker and Ellenie.
PURPOSE: Hard work with a good attitude needs to be done every time, especially when we don’t feel like it. I want them to feel an immediate impact fiscally and socially for poor attitude and lackluster effort.
It’s not about how much.
Don’t focus on the amount of money kids are paid for each commission-worthy task. Each household and person values things differently. My wife and I keep a large jar of coins in our room. My children are young, so for now, their commission comes from this jar. Paying in small doses like coins allows us to pay immediately and frequently.
PURPOSE: It’s not about the dollar amount, it’s about allowing my children to see the reward for hard work.
Give, save, spend.
The most important thing I teach my children about money is what to do with it. Each of my children has three piggy banks. One for giving, one for saving, and another for spending. First they give, then they save, then they can spend.
When it comes to spending, they have the freedom to choose what they wish to do. If they want to go to the dollar store and blow it all, great! Bring the spend envelope. If they want to buy a new video game system, awesome! Let’s work hard over a period of time to save for that purchase.
We currently give together as a family. When the give piggy banks are full, we purchase supplies for “blessing bags.” These are filled with toiletries, snacks, water, a bible, and money. We keep these bags in our car to give to people in need as we drive around.
PURPOSE: The goal is to create a standard reaction to always give first, save next, then spend.
Although I am a finance expert, I’m no parenting expert. However, I am proud of how my kids view money. They are hard workers that serve well.
Husband, Dad, and Sun Valley Community Church student ministry volunteer. A Finance Expert and Founder of Stewardship. Christian Ministries major from Arizona Christian University and bestselling author.