The following is adapted from Daddy Saturday.
Did you learn anything about money or financial responsibility in school? I didn’t, and if you have children, they’re most likely not learning about personal finance in school either.
If we want to change the next generation and if you want your kids to develop good financial habits, it’s up to each of us to teach our kids and model positive financial disciplines. Now more than ever, it’s critical.
Why? Because the amount of debt that Millennials and Gen Z is acquiring, whether it’s through student or consumer debt, is staggering. If we don’t teach our children the ins and outs of money where they’re young, we’re setting them up for major hardship later in life.
The good news is you don’t have to be a financial wizard to instill good habits in your kids. You just need a few strategies to get started.
#1: Start by Creating a Budget
The first rule of personal finance is focus on the behaviors, not the numbers. Start by creating a monthly budget and include your children in budgeting conversations. Be consistent in the practice of setting a budget each month and when appropriate open the family “books” for your children. My kids don’t know everything we make in terms of income, but we do let them see our expenses, so can they start to understand the concept of money, how much it costs just to pay our mortgage, how much their private school costs, what it takes to run the household.
By opening our family “books” it helps to engage our children in not only financial knowledge, but encourages a spirit of gratitude for what they have. It also helps them to understand why we choose not to do or buy something as it doesn’t fit into the families budget.
#2: Try Paying for Things with Cash
We also live in a society where kids can press a button and buy something. There’s no physical transaction, so another thing we do is show our kids the flow of money.
Before debit cards, we had to use cash at the grocery store and it stung a bit when you had to shell out $100, $150, or more. You feel that pain of flipping those 20s to pay for the groceries. Today, you insert a card in a machine and there’s no physical reaction to spending money. It’s invisible. Our kids don’t see that either, so I often have them use cash for purchases just so they see how much something really costs.
#3: Teach Them to Give and Save
Another component of personal finance we model for them is how to give and save. We’ve chosen to use Dave Ramsey’s Financial Peace Junior methodology of 10%, 10%, 80%. When our kids make money, 10% goes as a tithe to the church and 10% goes to savings. The remaining 80% is theirs to spend. While my wife and I help guide them to make good decisions with their money, the remaining 80% is truly theirs.
If you are not familiar with the tithe, it’s a biblical term that refers to bringing the first fruits of your labor back to God and the commandment is 10%. As a family we’ve made the decision to tithe at least 10% of our income back to the local church and we’ve involved our children in this practice. Whether you give to your local church or another worthy cause, the practice of generosity first is important for your kids to see so they can emulate in their own lives.
#4: Instill a Spontaneously Generous Spirit
While we routinely give to our church, there’s another principle called spontaneous generosity we do as a family. We often vote on giving opportunities, like helping a family in need around the holidays. In fact, it’s become a Christmas tradition for our family.
We give each of our children an envelope with $100—five $20 bills with each bill inside a Christmas card—$400 total, and we go out in the community, typically it’s to the laundromat, the Waffle House, a homeless shelter, or halfway house.
Each envelope has a little note wishing the person a blessed Christmas, and it’s up to my children’s discretion who gets it. We typically go to the laundromat because if somebody is doing laundry in a laundromat on Christmas Eve, they probably could use some cheer!
I cannot tell you some of the great memories we’ve made handing those envelopes out. It gives me chills just remembering the look on the people’s faces when my children walk up to them, say “Merry Christmas,” and hand them that envelope. More importantly, it’s about what’s happening in my children’s hearts when they practice a spirit of generosity.
Start Where You Are
An important takeaway here is that it doesn’t matter your income level or how much you know about personal finances. Habits like budgeting, saving, and giving back can be taught and modeled for children no matter your financial background.
The habits and behaviors are what’s important because if you teach them when they are young they will not depart from it when they are older. And that’s how we change the next generation.
Justin Batt aims to disrupt fatherhood with intentionality, by creating intentional fathers who raise good kids who become great adults. He founded Daddy Saturday in his own backyard with his four children, and it’s grown into a national movement engaging fathers across multiple channels, including YouTube, social media, the Daddy Saturday book, an Alexa skill, a podcast, merchandise, live events, and a 501(c)(3) foundation, through which Justin plans to impact 10 million fathers in the next 10 years.