Teaching kids about money…YIKES! Neither my husband nor I happen to be financial gurus. We’re just parents who are trying to live and raise a family (primarily) on one paycheck. It hasn’t always been easy and boy, oh boy, have we made mistakes! Thankfully, we’ve learned a thing or two along the way and now we are trying to pass what we’ve learned to our children so they can avoid those pitfalls.
As soon as our kids were old enough to understand that “money could buy stuff” we started teaching them how to handle it. At first we were just instilling habits but as they got older and could comprehend more and more we started teaching the principles behind the habits…the method to our madness. It took time for the lessons to start to sink in, and we are still trying to teach, coach, and encourage, but just yesterday we saw a small return on our investment of time and teaching.
Like many churches, ours is doing a “baby bottle boomerang” fundraiser to support the local pro-life pregnancy resource center. Earlier in the week I brought home a special baby bottle so we could fill it up with change over the next month before returning it to the pregnancy center. My thought was that I’d put my spare change there instead of in my 52 Week Savings Challenge jar. I emptied the change out of my wallet as “seed” and put the bottle on the kitchen table so my husband and daughter could participate.
My son drove over from university yesterday to attend worship with us. He and his sister headed out pretty quickly after the service (perhaps he was eager for a home-cooked meal?) and by the time I made it home the baby bottle was FULL. Both kids had taken money from their own spare change jars to fill the bottle.
I was so proud!
You can do three things with money once you earn it: you can give it, save it, and spend it. Many people find themselves in financial trouble because they’re really good at the last one but not so hot at managing the others. (Been there!) Knowing that, Jay & I set out to teach our children some guidelines and to demonstrate how to implement them. We used a Ten Coin System.
From the time the kids were small, we gave them “grace money” out of each paycheck. This was separate from our (initially small) deposits into their education savings accounts. We taught the children that it was by the grace of God that we have blessings to share, but if you want to share the blessings of the family you must also share the responsibilities. In other words, they earned their money by completing age-appropriate responsibilities and by having a good attitude about it.
Our children would receive 10 pennies as grace money while they were toddlers and preschoolers. At this point we were more concerned with instilling the habits of giving and saving than teaching them to spend wisely. We used a Ten Coin System so we could start teaching the percentages without having to teach calculations that were beyond such young children. We used pennies because we didn’t think toddlers and preschoolers needed a lot of cash. At this age it was about creating the habits rather than building up a big sum of money. As the kids got older, the pennies became dimes and then dollars, which gave them more opportunities to learn to spend on themselves and others.
Each week we would sit down and give each child ten pennies, explaining that they had done a good job with their family responsibilities and that we were happy to share God’s blessings with them. Our preschoolers saw grown-ups using money and they both loved to collect things when they were little, so it was exciting to have a little pile of their own coins. We are people of faith, so we taught them to put one of their pennies (10%) into a coin purse to take to worship for their tithe. It was our opinion that just handing them money to put in the offering wasn’t teaching them to give; they had to have their own money to do that, even if it was just a penny.
As a side note, we didn’t let the kids handle their money without supervision when they were very young, because coins are obviously a choking hazard. We would retrieve the financial teaching tools when we needed them and then put them away when we were done, only giving each child his church coin purse right before it was time to go to Sunday School in order to minimize the opportunity to taste-test or lose the coins.
Each child had a bank for long term savings. At first the bank was just a separate coin collection, but as they got older we taught them that long term savings was for big purchases, things like a car in grown up world or an expensive toy or game in kid world. We also talked about the importance of saving money to pay for university. Our goal was to teach the habit of saving and eventually the practice of living below one’s income. Each child would put three pennies (30%) in the bank. In our adult world that might include 15% for retirement savings and 15% to build up an emergency fund or for large purchases.
The remaining 6 coins (60%) were given to the child to put in a “Me” jar to spend. Of course, our toddlers and preschoolers didn’t really spend it, they just collected it and enjoyed filling up a jar and listening to the coins jingle. As the children got older and were given dimes or dollars instead of pennies they had more to possibly spend each week. In other words, from the time the kids were very young, we taught them the habit of spending (or living on) only 60% of their income.
As they became teenagers and earned money from part-time jobs and babysitting, the kids realized that they’d need to spend less than 60% and save more than 30% of their income in order to pay their share of their university expenses. It hasn’t always been easy, particularly when some of their friends seem to have a lot of spending money, but the kids are learning to set priorities and to live with the consequences of their decisions. Jay & I would rather see them make a few mistakes now while the stakes are lower and we are here to guide them than to make mistakes as adults when the consequences can be so much worse.
Right click on the Ten Coin System infographic to save a copy to your computer for printing. The Ten Coin System infographic is Copyright © 2017 Leigh A. Russell. The Ten Coin System infographic is provided for your personal use but as with everything on this site, it may not be altered, redistributed, or presented as your own work. If you’d like to copy or redistribute it, please contact Leigh at A Chat Over Coffee (dot) com.
Missionaries sometimes visit our church and there is often a special offering collected on those days. The kids like to participate, but we taught them that their tithes belong to their primary place of worship. Other offerings have to come from their “Me” money. At some point along the line each child had a separate “Mission” jar filled with change from their “Me” money so they’d be ready for those mission offerings. That was their doing, not something Jay & I required, but I suspect the rapid filling of the baby bottle was an extension of the mission jars.
Both of my children are older now and have been handling their own money for some time. They’re still a teenager and a university student and neither are living totally on their own just yet, so time will tell if they avoid their parents’ mistakes. I’m hopeful!
When I told my daughter I was writing this post and asked her what she remembered about the childhood lessons, the very first thing she pointed out was that consistency is key. She recalled spreading the 10 coins out on the table, much as I’ve done in the photos, and putting them away by category. Jay & I went through the Ten Coin System process with the children not only with their weekly grace money but also with money they received from birthday gifts or earned from jobs over the course of many years.
I also called my son at school and asked him if he was still using what he’d learned from the Ten Coin System. He said that the category labels have changed but that he is still setting aside his tithe and savings before his spending money. His savings categories now include various car expenses and university expenses as well as building an adult emergency fund.
Life Isn’t So Simple
Things obviously get more complicated as we get older. In adulthood the 30% long-term savings gets sub-divided and perhaps expanded into a full-blown emergency fund, investing for retirement, saving up for our children’s education, sinking funds for large purchases like a car or furniture, and a down payment on a house. What money goes where changes as life changes. The point of the Ten Coin System has been teach our children to give and save FIRST, then to spend what’s left, which is far less than their income. We all know what happens when spending takes the lead! The Ten Coin System taught them the habits and principles that are the foundation of a workable budget.
Update On My 52 Week Savings Challenge
My $ta$h of Ca$h will not be growing quite as quickly for the next few weeks because I’ll be using my spare change to fill another baby bottle for the pregnancy center rather than dumping it in my Challenge jar. This baby bottle offering is something we do outside of our regular giving and I want to do it well. I’ll continue to add my weekly Challenge deposits, though, because I also want to stay on track toward my end-of-the-year total.
Do you have any suggestions for teaching children about money?
I moderate comments manually but will get them posted as quickly as possible. Please keep your comments kind and if you must disagree please do so without being disagreeable. Rude or inappropriate comments will obviously not be published.
Update: This is the part where I remind you that I’m not a financial advisor, just a mom who is sharing her experience in the spirit of having a chat with a friend over a cup of coffee. Your investment results may vary from the examples given. If you require financial or investment advice, please seek the counsel of a professional advisor.