Friday, September 26, 2008

Tips on Raising Financial-Savvy Children

Always wanting to raise bargain-conscious children, we wouldn't allow "capricious" spending.   When we went to a store, if they didn't know before we went to the store that they needed something, they couldn't buy it.   This helped them plan their purchases wisely and avoided buying something they'd later be sorry for or decide they really didn't need.

Also, I never wanted to rob my children of the incredible feeling of really wanting something, working towards earning money for it, and then finally being able to purchase it.  That process is so rewarding I never wanted to "jump in" and rob them of the satisfaction of earning and purchasing things and wanting them for awhile before getting them.

Another thing I did was to make them "put something in."  When we were going roller skating, I'd say, "everyone needs to put in $1."  I did this for a few reasons:  first of all, they had to learn how to CONTRIBUTE.  I DIDN'T need their $$ as much as THEY needed to learn to contribute.  Also, this gave me a good feel for if they really wanted to do something or buy something.  If they weren't willing to put in $1, why should I put in $8 or more??!!

Another thing we encouraged was when an offering was passed around, or someone was soliciting for a cause, if it was a worthy cause they PUT SOMETHING IN.  Whether it was a quarter or a dollar or more, they had to put SOMETHING IN.  I encouraged them that if everyone did that, just THINK of the benefits!

My husband also set up a savings plan early with the kids.  They opened their own bank accounts, tithed on their money, and saved.  We tried the 10% tithe, at least 10% savings, and then they could spend the rest.  

To encourage responsibility and to make sure they took care of and valued their car, when they were about 13 or 14 we sat them down and did some simple math.  Calculating about 10 weeks per summer to work, and telling them we'd pay half of their first car, we figured out that even if they made $100 a week towards their car, it was still only $3,000, allowing them only a $6,000 car.  We encouraged hard workers AND savers this way!

We also set budgets for big things.  For prom I would set a $300 limit.  How they spent it was up to them, but they could save on their dress and go big on their nail/hair etc. or vice versa.  I never wanted my children raised thinking they could "have it all."  We gave them clothes "allowances" once or twice a year and they had to budget extremely wisely to get several items.

We also made things our children's responsibility early.  They were responsible for buying their own clothes at 16 years old.  That way, when we DID get an item or two for them here or there, they were grateful because they didn't "expect" or "demand" it.

Also, for college if their grades were an A or B we covered the cost of the class; if not, they paid for the class.  This encouraged good grades.  When we are contributing towards college or other expenses, if we see them spending large amounts of money frivolously, we tell them we're going to stop helping out so much if they have that much extra money.  We paid for their first year of books, but they paid afterwards, which made them shop wisely and be smart about re-selling their books too.

We also made sure that birthday limits were $50 or something a little more if it was something they really needed.   Even (especially!) at young ages, we had between 3-5 gifts for them to open, and we spent Christmases giving gifts to needy families.  We really wanted to discourage extravagance and overindulgence (although when they got to their grandparents' houses it wasn't the same story...!)  When our children got older, we took our vacations at Christmas and made that our "gift" to them.

Although we made some exceptions to our standards, we tried to keep as closely as possible to these systems we set in place.  If we saw someone really struggling, we stepped in to help them get a car repair done or a software program for school.   I believe our children are wise shoppers, cognizant of the value of items, more grateful, and more balanced in their spending choices because of some of these methods.

Challenge:  Start teaching your children early about the value of money and how important it is to be wise with their spending.  Make up your own standards with your husband, and toss different ideas around that YOU want to incorporate into YOUR family -- remember to keep their futures in mind!  Teach them that money is a responsibility; since it is God Who empowers us to get wealth and we are stewards of the provision He has given us.  Teach them that money is to bless others with, avoid extravagance and overindulgence (which will only set your children up for disastrous discontented futures), and raise generous children!

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