Financially Savvy Children

The National Council on Economic Education conducted a recent survey with high school students. The results were significant. Two-thirds of those tested on basic money skills scored an “F.” Only 3 percent scored an “A.” To me this is a pretty sad fact. Our children are our future and we need them to be financially responsible.  Another recent study shows that 10% of all bankruptcies are filed by 18-25 year olds. So what can you do to teach your children about financial responsibility? Here are a few tips:

Start early!: Studies have shown that by age 13 children's spending habits are in place. That means we have to teach our children very early on about finances. Start as soon as possible, and get good habits in place.

Teach them the value of a dollar: Last blog I talked about allowance. Take your children to the store that way he sees what that money can actually get him. DON'T CHIP IN! As parents we generally want to give our children everything but in this case the value of learning that he can't have it all will go much further.

Give them goals: That big-expensive toy in the store every kid "oohhhs" at- make that the goal! You can buy that WHEN you save for it. For Emily, it was the $100 doll house at Costco. She saved and saved and she appreciated it much more when she was finally able to walk in and pay the cashier for her own Barbie Dream House! She had a sense of accomplishment, appreciated that house a lot more, and learned the value of working for what you want.

Teach them to budget allowance: Allowance budget should look like this: 10% tithe 10% saving 10% big "want" 70% to spend. Teaching your children to plan for the future will only help them in the long run. The 10% saving they can use when they are older to help buy a car or bigger purchase. They will appreciate it later- I promise!

Teach them to work for their money: Chores,  extra jobs, and even a small business like an old fashioned lemonade stand can help with this task. Emily (usually my example because she is ridiculously good with money) opened an art shop- there was a sign that said "pictures on the left $1, pictures in the right $2, no phony money, no checks!" When I asked she said- well, I work really hard on my art don't YOU think I deserve REAL money? She did deserve real money, and she learned the art of having her first real income earning business!

Teach your child to TITHE: Yes, I said it! Most of you may not believe in tithing but it really works! Test God with the 10% and the rest will go further. If you don't believe me- millionaires are usually the biggest givers out there and the tax benefits are bonus! The very first time I taught Emily on tithing and how God had always provided for our needs she emptied the contents of her piggy bank and took it in to Sunday school. (I had no idea she did this) Later that evening my mom asked her to clean the bathroom (a $2 job) and them gave Emily $20. I was pretty upset because I was trying to teach Emily that 1 bathroom equates to $2, so I went to talk to my mom about it. My mom said "Sophia, I don't know why but I was going to give Emily the $2 and I had to give her the $20. When I handed Emily the $20 Emily looked at me amazed and said- my mom was right it does work! She told me that you had taught her to tithe the day before!" Talk about conviction! I don't always know how but I swear  it works!

Lead by Example: It's no secret that your children will imitate most things you do and finances are no exception. Handle your finances in a way that is responsible and chances are your children's actions will follow.

My last bit of advice is not for everyone, actually a lot of people will probably disagree with me on this one. Let your children help you balance your family budget. Why am I such a believer in this system? Well, when I was little my mom had problems with her vision so I would help her budget her checkbook. To a kid $1000 looks like $100000 (I think they add a few zeros to everything!) but if they see you have $2000 in your bank account and then they see the $1000 mortgage, auto payments and everything else come out, they will see how fast money does go! This will also teach them that there is no "money tree" and that money that you use from that debit card, you have to put money in first! It's not a 'magic' card. I learned this lesson REALLY early on in life and have been money conscious ever since!

Hope this can help steer you into raising financially fabulous little humans! :)


 Proverbs 22:6   “Train up a child in the way he should go: and when he is old, he will not depart from it.”.

Children and Money- How Should You Pay Allowance?

This is a question, I have heard over and over... Should you give your children a flat rate allowance or should they be paid based on the chores they do? Well, let's look at both sides of this debate:

Flat Rate Allowance:

Flat rate is a set amount of money given every week or month with nothing expected from the child in return. Why would you go for this method? Well, this is purely a way of teaching money management. Advocates for this method also argue that it teaches children to help and not have to expect anything in return.

The Chores Based Method:
The chores based allowance is either a set amount of money you give a week/month that is paid only if chores are done OR paying allowance only for specific tasks. Why would you chose this method? Well, supporters of this method will tell you that it teaches the relationship of working for what you earn. If you chose this method you should be clear about what chores are that way you do not raise a child that expects payment for EVERYTHING he/she does.

What method do we use?

In the Sanderson home we have a chores-based allowance system. Our children have their regular chores- keep their rooms and bathrooms clean, and kitchen clean-up. Those are done free- as I tell them because you live here and in this family everyone contributes, and because I am not your slave! However, we always have "extra chores" that can be done for payment. Toilet cleaning for example can be done for $2/toilet. When you have 3 in the house that can add up quickly! They can also always ask- is there anything else I can do for extra money? This method for us has eliminated the "I'll do it but how much do I get?" question that annoys me every time I hear it and also shows them them that initiative and hard work can pay off!


Stay tuned- In my next blog I will teach you how to teach your children the value of a dollar. :)