My oldest daughter, Ava, was five at this time.  She had been asking for a Nintendo DS for months – that is all she really wanted from Santa.  Tracy and I have money set aside for Christmas and plan out what we are buying to the dollar.  That Christmas we had spent all of our Christmas budget but I was seriously considering going against my own words (so much for practicing what you preach) and dipping into our emergency fund to buy Ava this gift.  I know a Nintendo DS is not an emergency but I could come up with some great reasons why she “deserved” this.  I mean, she was doing so well in school, she cleaned up after herself, she was a great big sister, etc.  I could on and on and justify why she should get this.

Nintendo DS © by Shalf

Well, after some discussion with Tracy, I finally came to my senses and did not buy this gift.  Christmas morning came and all was well.  Ava did mention that she wished Santa had brought her a DS but that maybe she would get it for her birthday.  She did not seem like she would need counseling or have to appear on The Dr. Phil Show.  Two days later our heat went out.  It was unseasonably cold that year and heat was a definite need.   We had someone come and, luckily for us, it was a somewhat minor repair.  However, the interesting thing was the price for this repair was around the same price a Nintendo DS cost.  How ironic, huh?  This was a true emergency and we could have spent this money on a gaming system rather than something to keep us warm.

I wanted to share this story to show you how someone that handles money pretty well can get caught up in the Christmas Season and find ways to blow money that he should not be spending.  Madison Avenue spends billions of dollars to get us to part with our money so you have to have a plan – especially during this time of year.  Before going shopping, make a plan and know exactly how much you will spend on gifts.  Christmas morning can be a magical time but the cold and dreary January can become much more difficult to handle if you have credit card bills start coming in listing things that you bought but could not afford to.  I know it is easy to lose track of the real meaning of the season but I hope that you do not get caught up in the holiday spending frenzy and make the same mistake that I almost did.

Nielsen did a recent survey among children between the ages of 6 and 12 asking what was on their list for Santa.  Unless you own stock in Apple, you might not like the findings.  Here is that list followed by the percentage of children that want each item:

Apple iPod Touch Unboxing © by DeclanTM

• iPad:  44%
• iPod Touch:  30%
• iPhone:  27%
• Computer:  25%
• Tablet Computer (non iPad):  25%
• Nintendo 3DS:  25%
• Kinect for Xbox 360:  23%
• Nintendo DS/DSi/DS Lite:  22%
• Television Set:  20%
• Smartphone (non iPhone):  19%
• Sony PlayStation 3/PS3 Slim:  17%
• Blu-Ray Player:  17%
• E-Reader:  17%
• Xbox 360:  16%
• Other Mobile Phone:  12%
• Nintendo Wi:  11%
• PlayStation Move:  10%
• PlayStation Portable:  10%

While it takes a minute for your mouth to close, here is a sampling of some of the prices of the above-listed items:

• iPad:  $499 (this is the price they start at)
• iPod Touch:  $189
• Nintendo 3DS:  $189
• Blu-Ray Player:  $68
• Nintendo Wi:  $179

I enjoy reading surveys but surely this would not correlate to what my 7 year-old would want for Christmas.  I mean, she has been raised by pretty frugal parents and we discuss money issues all the time with her.  In fact, she has a better understanding than many teenagers I know.

Shortly after Thanksgiving, we had Ava make her list for Santa Claus.  Well, once again I was wrong.  The number one item on her list was an iPod Touch!!!!!!!  Really?  What ever  happened to Barbie Dolls and Tinker Toys.  How about Lego’s or some clothes?  An iPod Touch for a seven-year old?  I am 36 and have a job and don’t even own one of these.  I was not this dramatic in my response to her but it really opened my eyes.  Like I mentioned, we are a pretty frugal family and discuss money related issues with our children on a consistent basis.  Even though this is true, Ava still wanted one of these more expensive gifts.

I know many people are still struggling this Christmas so we have to be very careful on how we are spending money.  It is very easy to get caught up in the holiday rush and buy things you cannot afford – especially when it comes to your children.  Most parents want their child(ren) to have a magical Christmas morning that they will remember forever.  The truth is, your son/daughter will probably not even remember what they got this year once next Christmas rolls around (go ahead and see if you can name every gift you got last Christmas – I know I can’t).  I would love for Ava to wake up and be so happy that she got what she wanted from Santa but we do not have that amount of money budgeted for Christmas this year.  Even though I could come up with reasons why she “deserves” an iPod Touch, I am not willing to dip into my emergency fund to buy it for her.  Even though she will not get this gift, I am sure she will not need to go on The Dr. Phil Show for counseling.  She may be disappointed but life will go on and she will still have a Merry Christmas.

What is on your child’s Christmas list and what do you think about this survey?

In a previous post, I discussed why getting a college education is so important.  Despite this, your child has to be smart about college debt or they will find themselves in the same spot many are in today.

Many young adults don’t think twice about racking up large student debts. I know that for some people, getting a student loan is the only way they’ll be able to attend college, so it can be a good investment for many, but I would advise you to sit down with your teen and explain how these loans work.

Many college students do not work, so they take out enough to pay for their living expenses as well as tuition and other student fees. I encourage you to explain to them that they’ll have to start paying towards this loan once they graduate, when they’re just starting out in life and will have many other expenses to worry about.  If your child does need to obtain a student loan, my advice is that they use it for educational expenses only and get a job to pay for their living expenses.

I shared a story I had with my 7 year-old daughter Ava last summer but want to discuss this again because it shows that you might even be able to discuss student loans with your child(ren) way before they start applying for college.  Last May, Ava’s school had Award’s Day for the students. Ava earned a gold medal for exceeding in all academic areas. Not many of her peers obtained this so I was very proud of her for working so hard at school.

The next morning, on our way to school, I told Ava how proud I was of her and started to discuss the importance of getting good grades and giving her best effort. I know college is far off but it will be here before we know it. I told Ava that if she continues to do well until she graduates from high school, she will have more options on where she can go to college. I also told her that a college might even pay for her to attend their school.

Ava then said, “That’s called a scholarship.” My mouth about dropped to the floor—we were on to something here. I then went further and explained that if she did not get a scholarship she could still go to college but would probably have to work or get a student loan.

Tracy and I do invest for both our daughters’ college, but may not have enough to cover the entire tuition ourselves. I went on to tell her that once she graduates and gets a job, she will have to start paying this loan off. Ava then said, “I will actually have to pay more than the amount the loan was for.” Now I was really in shock. I asked her how she knew this and she replied, “Most people don’t just give you money for free—you have to pay them more since they let you borrow it.”

At this point I did not know what to say.  My seven-year-old knows more about student loans than many college freshmen do.  When I got to school, I called my wife,Tracy, to let her know about our conversation. It turns out, Ava and Tracy had a similar conversation the day before.

We discuss money topics with our children as often as we can. We talk openly about how much I make and the bills that we have. I know some of the things we talk about are over our daughters’ heads, but this conversation showed me that maybe they actually understand more than what I think they do.

As a teacher, I know we don’t teach enough financial skills to our students. If you are a parent it is so important to discuss money with your child(ren) when the opportunity presents itself—you never know the impact it will have.

We decided to start simple. We have a chore chart on the refrigerator that lists two chores for each day of the week. She gets the mail from the mailbox on her way in the house after school and places it on the countertop. She then helps clean up the dinner table after the family meal each evening. These are simple chores that we feel are a good start to our daughter learning the principles of work and earning.

I pay her per completed chore at the end of the day. She puts the money in a jar. At the end of the week we help her decide how much she is going to give, save and spend. We always make sure some amount is given (10% as a guideline) and it’s her decision if she wants to spend all of her money or save some for the future. I think there are some valuable lessons to be learned when everything is spent and she doesn’t have enough to buy something she wants. She has to learn to earn and save more!

She is learning one step at a time. In fact this evening I told her we should set aside some money for giving at church tomorrow. She wasn’t too excited about that. She said she was only going to give a dollar out of her savings. I told her perhaps she could give an amount based on what God has laid on her heart. She said she didn’t think God wanted her to give any amount this week.

How are you doing with teaching your kids money lessons?  Do you have any breakthroughs or experience to share? 

Photo credit: brettneilson

Ava just finished first grade.  During the last week of school, her school had Award’s Day for the students.  Ava got a gold medal (it was real gold according to her ) for exceeding in all academic areas.  Not many of her peers obtained this so I was very proud of her for working so hard at school.

The next morning, on our way to school, I told Ava how proud I was of her and started to discuss the importance of good grades and why it is important for her to continue to give her best effort.  I know college is far off but it will be here before we know it.

I told Ava that if she continues to do well until she graduates from high school, she will have more options on where she can go to college.  I told her that a college might even pay for her to attend their school.  Ava then said, “That’s called a scholarship.”  My mouth about dropped to the floor – we were on to something here.

I then went further and explained that if she did not get a scholarship she could still go to college but will probably have to work or get a student loan (Tracy and I do invest for her and Ella’s college but will probably not have enough to cover the entire tuition ourselves).

I went on further to tell her that once she graduates and gets a job, she will have to start paying this loan off.  Ava then said, “I will actually have to pay more than the amount the loan was for.”  Now I was really in shock.

I asked her how she knew this and she replied, “Most people don’t just give you money for free – you have to pay them more since they let you borrow it.”  At this point I did not know what to say.  My 7 year-old knows more about student loans than many college freshmen do.

When I got to school, I called Tracy to let her know about our conversation.  It turns out Ava and Tracy had a similar conversation the day before and Ava gave me the information they discussed.  This is what Oprah refers to as an “A-Ha” moment.  We discuss money topics with our children as often as we can.

We talk openly about how much I make and the bills that we have.  I know some of the things we talk about are over our daughters’ heads but, this conversation showed me that maybe we don’t give them enough credit and that they actually understand more than what I think they do.

As a teacher, I know we don’t teach enough financial skills to our students.  If you are a parent it is so important to begin teaching your children about money when the opportunity presents itself – you never know the impact it will have.

Tell in the comments about how you take advantage of moments such as this to teach your child or children about money.

Photo credit

In his best-selling book Rich Dad, Poor Dad, Robert Kiyosaki discusses the life-altering impact his Rich Dad had on his life by simply teaching him about money and wealth.  In this article, we are going to discuss a few practical tools that parents and other adults can use to teach kids about money.

Channel One – Americans love credit.  Most of us have heard the statistic that the average U.S. household that has credit card debt carries around $7,000 in debt.  And we know that our country loves credit.  The Federal Reserve has injected about $2.3 trillion of stimulus into the U.S. economy over the last several years.  Learning about credit, and the potential dangers of too much credit, is essential.  Channel One is a fantastic website where parents can take their children and teach them about the power of compound interest, when it is working against you!

FamZoo – The website lets you put in the cost of an item and then calculate if it were financed with a credit card.  You can adjust the credit card settings such as the number of months for payment, interest rate, etc.  It can be quite eye opening to show a child that a $500 purchase turns into over $600 once a year of 20% interest is tacked on.

Teaching kids to save money and spend it wisely has been an age-old battle.  However, with FamZoo the challenge has been transformed into fun.  FamZoo is a website that allows parents to set up a virtual bank for their children.  They can set up children’s savings accounts and track all of the deposits, expenditures and withdrawals.

It is a fantastic way for parents to teach their children how to properly manage their money, but at the same time give the youngsters a certain degree of flexibility and independence by giving them their own account.  Parents can also set up interest-bearing accounts so that the children can learn about the power of compound interest.

My Budget Planner – Writing out a budget and sticking to it is difficult.  One of the greatest ways to learn how to budget properly is to start young!  My Budget Planner offers parents an online software program that allows them to co-create budget plans with their children.  Parents can then sit back and track the child’s progress online.

The software is especially designed to help children learn how to consistently save, plan expenses, give money, and stick to a budget.  Parents can even help children track any stock investments they may hold.

Children are never too young to begin learning the value of a dollar saved and budgeted, and these 3 tools offer parents powerful resources to help foster a life of financial well-being.

It’s also a wonderful time for parents to help their children learn responsibility and a good work ethic.  Depending on your child’s age, there are many options available to them.

Create a Plan

First of all, get a plan.  How much time does your child want to devote to earning an income?  Would they like to spend 5 hours a week doing so?  Or 10?  What is reasonable for them, their age, and your household?  Also, set any parental guidelines at this point, so they are clear on what they can and cannot do.  Make yourself available to them to answer questions and guide them.

Discuss Money Management

Then discuss the question of what is going to happen to the money?  They may want to spend it all on a large ticket item, but this is an excellent time to begin teaching them basic giving and saving principles.  I would encourage each parent to have their child give 10% of their income to their congregation or a worthy cause; 10% or more would go into savings; and 80% could be spent.  This will help your child learn to begin setting parameters from a young age for their money.

Decide on Work

And last but not least, decide what type of work they would like to try.  Is there a specific area they are gifted in or enjoy doing?  Here are some ideas to get you started…some are typical and some not so typical.  (Average Age: 10-18)

• Pet Sitting
• Babysitting
• House Sitting (picking up the mail and packages, watering plants, as well as checking on the house for someone who is gone)
• Making Greeting Cards and Selling Them
• Cleaning
• Making cookies and selling them
• Lawn Mowing
• Car Washing
• Dog Walking
• Paper Route
• Parent’s Helper (assisting a parent with jobs in their home)
• Repairing Bikes (if they are good at mechanical items)
• Running a garage sale

The main idea is to help your child begin to learn a good work ethic and teach them how to balance spending, giving, and saving from a young age.

Do you have other ideas for how kids can earn money this summer?  Please share below in the comments.

• Will you stay home with the baby or continue working?
• How do we pay off remaining debt so that we can afford additional expenses?
• Should we begin investing in our child’s future education (even before he or she is born)?
• What does it cost to have a baby?

With all those questions bouncing around in our heads and popping up over dinner conversations, our desire to find the answers seemed to well, just help us to really focus more on our financial stewardship.

In hindsight, it’s too bad it takes such big events (good or bad) to cause a more positive shift in one’s focus.  But yet, the motivation for financial responsibility somehow emerges whether it’s from within or after seeking some help from a friend or counselor.

Leave An Inheritance

Certainly, as parents the wrong attitude would be to spend all we have in order to enjoy it before we die.  A component of stewardship, and getting serious about finances, is managing money wisely so that we can invest in the future of our children.

A good man leave’s an inheritance to his children’s children (Proverbs 13:22).

In fact, I believe it’s Dave Ramsey who often mentions in his teachings that getting your financial situation under control is an opportunity to change your family tree!  Let’s dissect that for a moment.

Your Actions Today Can Change Your Family History

Have you ever thought about how your actions today can change your family history?  Let me be more direct.  The mismanagement of money could impact some of the financial struggles your child may face in the future.

I assume most people were not brought up under sound money management instruction and guidance within the family.  Unfortunately, education within our school systems and even in our immediate family was and is in many cases, still absent.

As an aside, I think every child should go through two courses at the appropriate age:  1) Biblical financial principles; 2) Practical steps and tools for managing money.

Today is an opportunity to change the future financial situation for your children and their children.  By leaving an inheritance, they have an opportunity to start their lives in a more financially stable position.

Get To The Wealth Building Stage ASAP

So as financial stewards husband and wife should try to get to the wealth building stage so they can create further financial stability and inheritance for children when they become adults.

For me, that sums it up right there.  Why tinker around with accumulating debt, paying off debt, accumulating debt, paying off debt, etc.  It’s spinning your wheels.

Rather, we should make forward progress and get to the wealth building stage of our destinations so that our family tree can be changed forever.  This includes becoming debt free and funding an emergency savings plan so that retirement investing can be started and finally, the savings towards a child’s future.

Help Ensure Children Avoid College Debt

I think about debt when it comes to saving for children’s education.  My parents provided much of my college needs and I’m grateful for that.  I know they had to take on some debt to do it, but as loving parents they did everything they could to help position me to leave college with as little student loans as possible.

I want to extend that even further by providing debt free education for my children.  I want to pay for their college with cash so they can leave without us both owing anything!

Building Momentum For Your Children

So, in summary, instead of your children digging, scraping and clawing their way to getting out of debt and building an emergency fund, they could skip some of the Dave Ramsey Baby Steps or Money Map Destinations (by Crown Financial Ministries) and go right into wealth building.

That’s right, have you ever considered the importance of this?  For many of us, we’re working hard to take steps to move forward on our respective journeys.  There is certainly something to be said for hard work.

But, if I we can teach children about money andprinciples of financial stewardship, but also advance them (or start them) further on the Crown Money Map or Dave Ramsey Baby Step journey, we will have followed the principles from Proverbs 12:22.

Do you plan to leave your children an inheritance?  If so, what steps are you taking today to do so?

This is a post I originally published at BibleMoneyMatters.com.

When the Bible instructs parent to “impress [the commandments] … on your children,” and “to talk about them when you sit at home and when you walk along the road ,,, (Deut. 6:7) that surely includes what God wants our young people to know about  the  use of resources.

Here are ten things you can do to shape your young spender’s financial future:

1. Show Them the Money

One of the best things you can do for your teens is to put them in touch with prices. Show them the gas and electric bill, the phone bill, the car payment, the mortgage or rent. The wise business woman of Proverbs 31:16 “considers” the field before she “buys it.”

My wife and I have our young spenders go grocery shopping with us, picking out the best deals together, stopping to grab that half-gallon of cookie dough ice cream because it’s on sale. I have had one of my daughters pay some bills with me on-line. I let her do the clicking, entering the $80 for the family mobile phone policy, the $65 for the water bill. In the fall, when I was out of the country, I asked her to pay some bills for me. She pulled it off like a financial cyber-pro.

2. Bankroll Them

Young adults will cost you, whether they manage their money or you do.  When they are little we give them allowances. As they age we need to give them an increasing amount of money until they manage all their own expenses. Figure out what you spend each month on your teens (not housing or food), but clothes, lessons (piano, dance), French fries, cosmetics, and entertainment. This might be a significant sum, but it is what it is. Then each month give them that amount of money and let them do the paying. In this way, they learn to set priorities (jeans this month, shoes next), and to make consistent payments for their lessons. If they run out, don’t rescue them. Make them live in the real world of you’ve got what you’ve got.

This is the best route to financial independence. One recent December, my teen daughter bought, with her allocated money, all the Christmas presents that she gave. Recently she picked up a pair of Converse shoes and Lucky jeans. Her choices are wonderfully up to her.

3. Make ‘em Pay

There are some things that most teens won’t be able to buy without you, perhaps it’s the MP3 player, the cell phone, the cost of their involvement in a school activity, their first car, college. There is still value in them paying something. Require them to save up a portion of the cost. It’s a great chance to teach so many things, not the least being learning to delay gratification. “Diligent hands bring wealth.” (Proverbs 10:4)

When my daughter wanted an MP3 player, we discussed with her what she could contribute to the purchase. This was a bit tough on her, but we talked it out and she proposed a figure. It was a significant amount of money for her, so she had to wait, and work and save. But when the time came to buy, it was a meaningful, satisfying buy.

4. Show Them the Cost of Money

Explain interest to your teens. This matters! You are protecting their future marriage. Financial stress and conflict are leading causes of divorce. Show your teens the amount of interest you pay on your home loan, your car loans, and your credit cards.  Explain that, for most people, things like a home purchase require paying interest.

Show them, on the other hand, the danger in debt. A few years ago, I showed my daughter our credit card statement. The daily periodic rate was .0828%. That didn’t seem like much now to  her? The annual percentage rate was 30.24%. Now that is a monster we  all want to avoid!

I know a parent who will loan her teens money if they are out shopping and forget to bring their wallets along. But she charges a small amount of interest. She’s not making money; she’s making responsible people.

5. Introduce Them to a Banker

To aid our empowered spenders in controlling their money, we took them to our credit union and helped them open savings accounts and obtain ATM cards. Once they leaned to manage those, we moved on to Visa check cards, debit cards. Different institutions have different policies, but we found our credit union very helpful. Now both girls have checking accounts, and they keep track of these online. They have small savings accounts so that if they go over there is overdraft protection.

But they are learning that when the money is out, the money is out. If they incur fees, they are responsible for them. And we don’t bail them out. The best financial teacher is experience. Not every teen is ready for this, but at some point they need to get ready for this. Adulthood, it’s coming fast.

6. Shop ‘til They Drop

Then next time they want to buy something important to them, comparison shop with them. Take a trip with them on-line to web sites that offer product reviews and comparisons. Go with them to several stores before making big purchases. Show them how to look for sales in the newspaper, how to use coupons.

When my daughter upgraded her mobile phone recently, we read the reviews on the internet. Through our research we found the coolest phone at the coolest price. What a fine feeling – tracking down and capturing a great deal!

7. Share a Classic with Them

Proverbs 21:20 says, “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” Help your teens set up a savings account and a savings goal.  Saving is at the crown jewel of good money management. An emergency, a sudden need doesn’t throw the saver into a panic. Capital, margin is an antidote to financial stress. And through saving, they can eventually get some really cool stuff.

They can save up for a trip, perhaps for their part of a car. My oldest daughter bought her own TV, after saving. She bought a leather couch for her room – saving.  She bought her own PlayStation – saving. She has the most fun room in the house – because she saves before she spends.

8. Don’t Forget Generosity

Having something to give is a privilege, a pleasure. Begin to talk to your teens about charity. Proverbs 3:9 teaches, “Honor the LORD with your wealth, with the first fruits of all your crops.” One of the best ways to help young adults learn to do this is to show them what you donate to your church, disaster relief, medical research, your alma matter.  It is more blessed to raise generosity than stinginess. This is important, you may be raising the next Joan Kroc or Bill Gates.

Proverbs 11:25 says, “A generous man will prosper; he who refreshes others will himself be refreshed.” My wife and I pay the school tuition for several students with disabilities at a Christian school in Tijuana, Mexico.  Following our choice one of our girls decided to donate some of her money too. How satisfying!

9. “Get a Job”

During the school year, we have decided that we don’t want our teens working, or working very much. We want them to focus on their studies, to enjoy life when they finish the homework. But they can do something. The occasional Saturday job, the short-term summer or intercession job – it’s excellent training. In some markets, it can be very hard for teens to find a job on their own. We found success in helping our young adults get their first jobs through friends and personal connections. It may be mowing lawns, babysitting, working for a friend with a business. Proverbs 12:14 teaches that the work of a man’s “hands rewards him.”

A while back, one of the girls got a job tutoring a younger student. It was perfect! Four hours per week for really good money. Excellent possibilities are out there for the go-getters who have connections.

10. Be the Model

There is no more powerful influence than the power of a good model.  If you make smart choices your young spenders will see how to make smart choices. If you show restraint, they will have a model of restraint. If you overindulge, show them what it is costing you. If you make a late payment, show them the late fees.  When you get a bargain, brag about it. The girls know which new sports car I like. They also know that I don’t have one in the garage. In speaking of wealth, Proverbs 23:4 says that we are to “have the wisdom to show restraint.”

This is a guest post by Randy Hasper.  Randy Hasper is a Christian thinker, writer, teacher and pastor.  He lives in San Diego, California with his wife and two daughters.  He has taught at high schools and colleges in California, been a pastor of two churches, has traveled widely and published articles on leadership, Christian ministry, relationships and nature in various journals and newspapers.   You can find Randy blogging at Thrive and Modern Proverbs.

My parents were running low on money that Christmas season and did not have any money for presents.  They decided to start delivering newspapers from October until shortly before Christmas to earn money to buy us presents.  They would get up around 1 am, carry me and my brother into the car, go get and sort the daily paper and start delivering them.  We would get home around 5 am and my dad would sleep for 2 hours before waking up for his day job.

Until having children of my own, I don’t think I appreciated what they did enough.  They did not wait for someone to give them money or for a Christmas miracle; they sacrificed sleep to ensure that we would have a Merry Christmas that year.

I cannot remember one present I received that year but will always remember the gift that my mom and dad gave me.  I feel lessons like this have led me to become the man I am today.  Thanks mom and dad – Merry Christmas!

Photo by DRB62.