Learning Early to Budget

We chose to pay our children for some of the work they did in our home. With our family business and 7-1/2 acres of land, we had plenty of extra work to do. Paying children to do some of it gave us the opportunity to teach them about money.

  • First, we wanted them to understand that God had blessed them and that they were to be good stewards of His blessings.
  • We wanted them to understand that God provides for us through our work.
  • We also wanted them to learn to use their earnings to bless others and further Christ’s kingdom on earth.
  • We wanted them to learn good habits of self-discipline, saving, generosity, and planning for the future.
  • We also wanted to help them develop life-long habits of budgeting and stewarding their money well.

Every time they earned money, we helped them divide it into different designated budget categories. They started budgeting when they were earning a dollar or two a week, and continued to follow their budget when they earned more money working for our business, teaching music lessons, and running their own small businesses.

Over the years we have seen the fruit of those early lessons in budgeting. The children paid for many of their own expenses – clothes and gifts – and they invested in livestock, books and classes, small business ventures, precious metals, and even some furniture and other supplies for their future homes. Our boys paid their own way through college. They bought tools to build a log cabin on their grandpa’s property, equipment for their old time band, feed and medications for their livestock, and seeds and supplies for a flower stand at the local farmers market. While the real estate market was floundering, Daniel was able to take his savings, combined with his equally thrifty wife’s savings, and pay a sizable down payment on a house that was perfect for his growing family. Lord willing, they will own it free and clear in less than five years from when they moved into it.

It all started with little 25 cent jobs here and there in our home, and a humble lineup of little milk cartons that held each person’s savings! Every family will have their own ideas, but here’s how we had our children divide up their earnings when they were young:

5% Charity – This was money set aside to share with others in need. They used it for needy families during the holidays, helped support orphans and missionaries in foreign countries, and entrusted it to our church leadership by frequently placing it in the alms box at church.

5% Living Expenses – We wanted the children to realize that much of the money God enables us to earn is provided for our physical needs. This portion of their budget was mostly for clothes, and they learned to be thrifty in their purchases, shopping at thrift stores, garage sales, and fabric stores for materials to make their own.

10% Tithe – We taught them to always set aside a tenth of their earnings. God is the one who blessed them with work and wages. The tithe acknowledges that all that we have comes from His gracious hand.

15% Short-Term Savings – This category of savings was designated for short-term goals, which translated mostly into the purchase of birthday and Christmas gifts for others, or materials to make gifts, which stretched their money much further and resulted in personal and creative gifts. This money could also be used for something like a long saved-for bicycle, art supplies, hobby supplies, etc.

20% Spending – They could spend this money on their “heart’s desires”. We offered guidance, and could veto any purchase we considered especially unwise, but the children generally had the freedom to spend this money as they saw fit. Some mistakes or foolish purchases were occasionally made with this money, but we considered those learning experiences that would help them avoid the bigger financial mistakes of adulthood.

20% Long-Term Savings – This money was saved to invest in future assets, things that would help them further their goals – a car that would get them to college, career and skill training, establishing a business. Each of our children invested some of this money over the years into livestock projects. Some made money. Others demonstrated why farming is not always extremely profitable. They all learned a lot about responsibility, business practices, and record keeping. Sewing machines, garden seeds, and other materials for business ventures also came from this category of their savings.

25% Dowry – This is probably a new concept to most readers. We asked our sons to set aside this money to give to their wives when they married. We also had our daughters save this money to take into their marriages. It is for the wife to use in establishing her own in-the-home enterprises, or to invest as she pleases. Some have used it to purchase items for their future homes and some have contributed to a down payment on their home. The boys who went to college used a portion of this money to earn the college degree that now enables them to provide for their family.

A side benefit of this practice was the future orientation that our children grew up with. The boys worked toward being prepared for marriage. The need to provide for their future wife motivated them toward vocational training and faithful labor at work and in school. The girls invested in household items and skills that they would value in future years.

Budgeting can be taught, even if you choose not to pay your children for work. If they receive an allowance, they can budget that money. When they start to work for others, they can budget that money as well.  But paying for extra work around the house and yard allows the opportunity to teach children about work, earnings, budgeting, and saving at a very young age.

 

(This post is adapted from material in Doorposts’ Stewardship Street, which also provides patterns and instruction for making a “village” of milk carton buildings to store each category of savings.)

(Photo from Shutterstock.com)

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2 Comments

  1. Hello,
    How young did you start this and how did you differentiate between simple chores and contributing to the family vs a paid chore? Our oldest daughter is 4 and I was just wondering how we could incorporate that for her. Thanks!

  2. When my kids were 5, 7, 10 & 12, we started dividing our money. Our “banks” initially were 4 ziplock freezer bags stapled together.

    We divide our allowance into four groups: 25% tithe, 25% spending money, 25% birthday savings (short term savings projects-for that special toy or something, that they can spend once their birthday comes around), and 25% into 25 year savings.

    After a while I put a balance sheet into each of the savings bags, to keep track of money to keep it from being lost if it spilled. Once the birthday money and 25 year savings started to become even more unmanageable amounts of money, I started keeping a ledger and a ‘bank’ for their 2 savings accounts. They end up now even saving their birthday money for months, until they have something they particularly want, and all they need to do is ask to have access to that.

    And having suddenly had access to large amounts of ‘saved’ money, when birthdays started to roll around, motivated them to ‘sacrifice’ for the sake of the future benefit.