Financial Foundations for Families

Financial Foundations for Families

My kids often say, “Oh, you mean back in the 1900’s” whenever my husband or I talk about our childhood or teenage experiences—in this case back when we used to use cash, balance our checkbooks, get paper bank statements, plan for our expenses and didn’t have access to credit cards—gasp!

Even though the world of money management includes ever-evolving technologies and methods, personal finance still comes down to some simple principles that can be learned at any age! It’s easier to teach a healthy practice now rather than undo a bad habit later, right? As Benjamin Franklin coined the phrase, “If you fail to plan, you are planning to fail” and in this case it’s all about the Benjamins!

Full disclosure here, we are still in the beta-phase with our kids, and I’m not authorized to give financial advice—but my hope is to share some things to get the conversation going in your home!

Principle #1 Back to Basics: dollars & cents in the modern world

Banking

There’s a myriad of different options for banking, online programs and payment apps to choose from so pick what fits best with your current systems. Start at your bank by opening a youth checking account. It doesn’t really matter where you go or what app you use, as long as you make a rhythm of paying attention to it. You can even use the old fashioned 3-jar method with one jar for spending, one for saving and one for giving as a step up from the cute piggy bank for littles!

Earning

Learning to earn & cultivating buy-in

• Encourage summer/side jobs, selling their creations, lemonade stands
• Introduce them to savvy spending practices: coupons/discount codes, waiting for sales, planning for purchases, shopping bargain stores, buying secondhand, borrowing
• Help them learn the difference between needs & wants. Make a family game out of it by writing needs or wants individually on a strip of paper and quiz each other
• Play with them! Monopoly, Pay Day, Financial Peace Kids and many others introduce the basics
• Teach them skills to evaluate their growing collections (coins, cards, etc.) like how to buy, preserve and maybe even sell
• Create a chore system for getting an Allowance that reflects your values
• Avoid entitlement by practicing gratitude for gifted money (thank you notes are always in style!)
• Support their fundraising efforts for trips, camps, etc. and establish minimum goals

Saving

Sensible saving strategies (some with the help of a professional)

• Big purchases: Set tangible, age-appropriate, attainable goals that will motivate them
• Education: Education Savings Accounts, 529 plans, interest bearing savings accounts or mutual funds can grow over time. The main goal is to start early and contribute regularly for maximum benefit
• Retirement: long-term savings can start with a Roth IRA as soon as W2 wage income is earned
• Delaying purchases: Avoid impulse buys and end up saving in the long run, it might even be that the “need” for said item goes away with time
• Plan: establish a spend/save/give formula and stick to it or make it automatic (i.e., 50/40/10)
  
  

Principle #2 Budget-Friendly: becoming friends with a budget—for life!

Creating, and maintaining, a budget of what comes in and what goes out has become one of the single most impactful tools that has helped our family as we earn, spend, give and save intentionally! Budgets are living documents that you can edit as needed (hopefully at least annually). There are many methods or programs out there to choose from. In fact, most spreadsheet providers have ready-made budget templates that are very user-friendly. Or you can even use old fashioned pen and paper! The key is learning the information in it, tracking it and identifying where changes are needed.

As your child gets older, show them more behind the curtain and walk them through your budget, utility bills, bank statements, credit card statements, assess subscriptions, review what it takes to rent housing, and tax returns to give them a head start to adulting!

Principle #3 A Firm Foundation: where our Treasure is

One could say this is really the first and only step needed, if we use God’s Word as our guide, “But store up for yourselves treasures in heaven…For where your treasure is, there your heart will be also.” - Matthew 6:20-21. How we manage money can reflect our heart toward Him. No judgment here, we are still actively working this out in our family. But we can all look for the fruit in our systems to see if it is producing Good or bad fruit. Bring kids into the conversations about where you donate to, and why. Prioritize tithing (Proverbs 3:9, Malachi 3:10) and don’t forget to invite the kids into it!

Bottom Line:

Ultimately, do what works best for your own family’s dynamics and needs. Exploring these principles together early and often can help shape healthy habits for years to come!