Teaching Financial Responsibility
A few weeks ago, I went to the bank to open an account. The banker, reviewing my other accounts, asked if I normally carried a large balance. “Not intentionally,” I replied. “But I’ve been saving a lot lately.”
“MONEY IS NOT
IS AN IMPORTANT
“Your money should at least be working for you,” said the banker. Before I knew it, he had restructured my accounts so that I was earning more interest. I left the bank that morning with a new appreciation for the complex world of finances and the people who make it their job to understand it.
I’m sure I’m not alone in feeling that rather than me managing my money, it manages me. Like eating nutritiously or building healthy relationships, managing money is a crucial life skill—yet one that many parents feel completely unprepared to teach. It’s confusing enough to manage your own finances—how can you teach all that complicated information to your high schooler? And how important is it anyway? After all, finances isn’t a required high school course like English or history.
But while a course in financial responsibility won’t actually get your student into college, the ability to manage money may make all the difference in whether he or she can afford that college education, launch into adulthood on a beginning salary, live independently, run a household, and provide for retirement.
“Money is not everything, but managing it is an important thing. So many people can’t,” says John Schneider, a father of two homeschool graduates. John, who volunteers for the benevolence ministry at his Alabama church, goes the extra mile to teach the people he helps how to change unhealthy financial habits. “It was one of the things that was on my heart when we were raising our kids. I just wanted to make sure that they were able to make it on their own. It wasn’t that important to me that they made a lot of money, but I wanted them to be able to take care of whatever money they made.”
“It’s important for parents to be intentional about teaching their children financial responsibility,” says Chuck Bentley, CEO of Crown Financial Ministries and a homeschooling father of four sons. “It’s an essential part of their future skill set. If they’re not capable of doing this, it’s very difficult for children to become financially independent of their parents or to make great progress in achieving their own goals.”
Start with the Principles
Chuck encourages parents to start teaching the principles of financial management as early as possible. He lists seven broad topics that even the youngest of children can learn: delayed gratification, the importance of work, saving money, avoiding debt, investing, entrepreneurship, and stewardship (being faithful with what God has entrusted to us).
Four of my adult friends, all of whom were homeschooled through high school, say that learning financial principles had a profound effect on how they manage their money today. “Parents’ attitudes will become their children’s mentality,” says Brittany. She shares how her parents tithed regularly, giving her a strong sense that she was a steward of God’s money. “That example really factors into my decisions now,” she says.
Joe saw his dad work two jobs in order to put himself through college while supporting his young family. Today, Joe has a strong sense of the value of hard work.
“You can learn the mechanics,” says my friend Erin, who works as a client transition specialist at a financial planning agency. “It’s getting the principles that’s the hard part.” She says that the most important principle her parents taught her was fiscal discipline—tithing, saving, and spending wisely. “In the last year, I’ve been able to pay down a loan and still be able to have an emergency fund, save for a trip to Europe, and put money in a retirement account. That’s all come through budgeting and frugal spending.”
What’s important, says Chuck Bentley, is to intentionally teach these concepts rather than just hope your kids will pick them up along the way. “Many characteristics and values in our home can be picked up by observation, but learning to be financially responsible actually requires more intentionality than not.”
When your student reaches the high school years, Chuck recommends a teaching approach that combines some formal instruction with lots of practical experience. When their oldest son was 14, Chuck and his wife hosted a small-group study for their son and eight of his homeschooled friends. Using Crown’s teen study guide, Discovering God’s Way of Handling Money, Chuck led the group through the lessons and also planned field trips to provide hands-on application of the concepts. One of his favorite experiences during that study was having the boys plan a party with the money left over from going out to eat on less than $5 each.
“They thought it was going to be impossible,” Chuck recalls. “They ended up going out for pizza and had about 90 cents left over per boy. They turned this money over to my wife, who used it to buy everything needed to throw the party. They could not believe how nice of a party they had for that small amount of money.”
Chuck also emphasizes providing work experience for your teens. “That’s one of the best ways to understand financial responsibility. When they begin to equate a dollar with the work unit required to earn it, they begin to appreciate where money comes from, how it should be allocated, and how to be frugal with it.” Finally, he encourages parents to involve their teens in family discussions about finances.
How it Looks
All of my friends point to practical experience during the high school years as crucial to their understanding of money today. For example, Erin and Joe were both given the responsibility for some of their own expenses early on. Over the years, their parents provided them with a small allowance, paid them for certain chores, or both.
When Joe was 12, his parents began giving him a set amount of money each year, making him responsible for buying all his own clothes. The lesson Joe learned? “Living is expensive.” The experience also gave him practice in finding a balance between spending none of the money at all and making sure he had enough clothing to look respectable. “You’re going to learn more from experience than from a book,” he says.
Chrissy’s parents (John and Amy Schneider) took a slightly different approach, beginning the process of handing over financial responsibility after high school. (This allowed Chrissy to save for college during the high school years.)
“During the first few years of college, my parents were there as a safety net as I increased my financial responsibility for expenses like clothing, gas, car repairs, and books,” she says. “They practiced a gradual process of turning over responsibility; with each semester, I was responsible for more items. It seemed a very natural flow for my family—as I grew, I assumed more responsibility for my finances because that’s what is expected of an adult.”
The parents also made sure that their teens had the appropriate bank accounts and experience with computer bookkeep-ing programs like Quicken.
My friends note that one of the things they would have liked more of during high school was some training in the nitty-gritty details. They mention things like the how-to’s of creating a budget, filling out a tax form, using coupons, and navigating health insurance or an employee healthcare plan—“things you wouldn’t know naturally and can’t pick up just by example,” as Brittany puts it.
“I’ve had to learn a lot on my own about certain concepts—things like car insurance,” Erin points out. “It’s part of the cost of a car.” In other words, don’t overlook step-by-step teaching as you seek real-life experience for your teen.
You Can Do It!
What if you feel clueless in the area of finances?
“I think there are many parents in that position,” says Chuck. “My father was a musician, but when it came time to teach me the principles of athletics, he read about them and taught them to me more carefully than someone who knew them naturally might have done. Parents can do the exact same thing in the area of finances—get hold of some really good material, read through it yourself, and use it to train your children, knowing it’s good for both of you.”
For Brittany and Joe, their parents’ struggle with finances turned out to be instructive. Brittany says her parents emphasized lessons that came out of their own experience with debt and unemployment. Joe’s parents sometimes brought him along when they attended financial classes.
As Chuck says, “That model seems to play itself out in everything related to homeschooling—we learn along with our students.” And the work involved will be well worth the investment when you see your teen reaping rewards long into the future!