Do you talk to your children about money? A recent survey shows that people are more likely to talk to their children about manners, good grades, eating well, etc., than they are about money.
RumboughFinancial education is important, and the earlier the better. A good start is to give your children an allowance. There has been some debate about whether or not it is good to give your children money, but when it is structured properly, it becomes a great teaching tool.
Help your children understand why they are getting the allowance, such as cleaning their room, helping with family chores, etc. Some families condition allowance on the completion of certain tasks, and deduct from the allowance if that task isn’t completed. Some may offer an extra amount for extra chores. These actions help your child learn that work equals pay.
Before they receive their first allowance (or before they receive their next one, if you have already started), sit down with them and discuss goals. Help them choose something to save for.
Also talk to them about the importance of tithing. A good rule of thumb is to use the same formula many adults use for their household finances – 10 percent for church, 10 percent for long-term goals, 10 percent for short-term goals, and the rest to live on (immediate spending, hanging out with friends, etc.).
You might even want to offer special incentives for their long-term savings, such as matching what they have saved over a certain period of time. Right now, a long-term goal may be for a certain toy or game, but as they get older, they need to learn to expand their long-term perspective. Allow them the satisfaction of purchasing something they have saved for over several months a few times; then, as they get older, start introducing college savings to them. If you have set aside funds for their college, let them see the statement. Also show them how much it would cost if they were to start college today. This can be a real eye-opener.
When you talk to them about tithing, show them the church’s budget. Help them to understand that they are helping to pay those expenses and indirectly helping people learn about Jesus. Learning good stewardship now could save much heartache later, and is pleasing to our Lord.
– Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at 800-723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.