We all know how important financial stewardship is in a person’s life. The world is full of examples of people who haven’t handled money the right way and paid for the consequences dearly. If you’re a parent, you want to teach your children how to become financially savvy while they’re young. Parents are the number one influence on their children’s financial behaviours. It’s up to you to raise a generation of wise consumers, investors, savers, and givers.

The Bible has a lot to say regarding how we should be using our money. This means we should be teaching these financial principles to our children and teaching them at least the basics of personal money management.

Proverbs 22:6 says, “Train a child in the way he should go, and when he is old he will not turn from it.” It’s never too early to start teaching your children about managing money.

Below are the top lessons to help your child learn how to manage money, as well as activities that you can do to effectively teach them:

1. Work: Money is a fruit of your labour.

When children see cash simply pop out of the ATM, they think that we have an endless supply of money that you can get whenever you want to. They don’t realise that money is a finite resource. That’s why you need to teach them that money is earned through work—good, hard, and well-done work.

A common mistake parents make is to passively give out money to their children whenever they ask for it. This teaches them to think money comes easily or automatically. Consequently, they disassociate money from work. Sooner or later they feel it’s their right to have money available even when they haven’t worked for it.

TIP: You can show your children how to work, to make things, to sell them. Show them how work can be meaningful and fun as well as financially profitable. A friend of mine makes bread and cakes for a living. Sometimes, he asks his children to sell some to their friends and they then get to experience first-hand how to work for money.

2. Wait: Delayed gratification vs. impulsive buying.

One of the most important lessons to teach your children is to say “no”. Teaching children delayed gratification helps combat the “buy now, pay later” attitude that can land them in credit card debt later on. Emphasise the idea that waiting pays off. Children are by nature impulsive spenders and need our help to develop sales resistance.

Be careful when they ask for a new toy, ice cream, or candy. Learn when to say “no”. Find ways to teach them that waiting is better than immediate gratification. Self-control learned by children in one area often carries over into others. A child who has been trained to say “no” to unnecessary purchases is much more likely to say “no” to sexual immorality and drugs.

TIP:  Make a homemade meal together with all the ingredients your child loves; then microwave a store-bought frozen one. The homemade food you cooked takes longer, but it tastes way better.

3. Budget: Live within your means.

Explain that a budget is a plan for how you are going to use your money. The Bible actually points to the necessity of budgeting. Read them in Proverbs 16:9; 21:5; 24:3-4; 27:23-24 and Luke 14:28-30. These talk about why it’s imperative to live within your means, tithe and save a regular portion of your income. Discuss the problem of overspending, borrowing and getting into debt.

Show your kids your paycheque and how it is spent in your family. Depending on their age, you can use real notes or play money in an amount corresponding to your paycheque. Put the money in piles to show exactly how much goes to what expenses each month.

This way your children can visualise where the family’s money goes. They may see things in perspective for the first time. They will then know the reason why you tell them to turn off the lights when not in use or to turn off the tap while brushing their teeth.

TIP: The best way to teach children to start managing money is to give them some. Children cannot learn money management unless they first have some money of their own to manage. You could provide it through some kind of allowance or by earning it through doing house chores.

If your children are spending your money, they’re not going to think twice about spending it. But if they’re spending their own money, they’re going to make much better purchasing decisions. Once your children start earning an income, you can begin to teach them to live on a budget.

The Jar Strategy

To teach children how to budget, give them three jars – each labelled “Saving,” “Spending” or “Sharing.” Every time they receive or earn money, whether by doing chores or from a birthday, tell them to divide the money they receive among the jars. Tell them to use the “spending jar” for small purchases, like candy or a small toy. Money in the “sharing jar” is for giving to the church or can be used to donate to a friend’s cause. The “saving jar” should be for more expensive items.

As your children spend their money they will need to prioritise. If they spend all their savings on only one item, they won’t have the money to spend on other things they might want. Because they don’t have enough money to buy everything they’d like, they need to figure out what’s most important to them.

Remind them not to spend their money as soon as they get it. If they blow their allowance on a new fad, then they learn first-hand the consequence of impulsive buying. Curbing impulse buying goes hand in hand with teaching delayed gratification.

Simply knowing where the money is going is a big step forward in your children’s money management skills. Have them write down their budget in a notebook or go on a computer to keep track of their money. As early as now, teach them the importance of keeping receipts and statements.

4. Shop smart: Plan to spend wisely to avoid overspending.

Show by example. Before you go shopping, create a budget. Write or discuss what you’re going to buy, what stores you’re going to, and the price range for each item. Then compare prices so they learn that planning purchases before you buy saves you from mindless spending.

While everything costs money, some options cost less. Teach kids to compare prices and stretch the budget as far as possible.Tell them about how to benefit from sales and coupons, which require some effort but can stretch their allowance money a little further.

Give them ideas on how to make the most of a limited budget. Is it wise to buy an item in its full price or wait for it to go on sale? That’s a skill that will come in handy when they get older.

TIP: To make it a memorable way to teach your kids the emptiness of materialism, take them to a garage sale or junk yard, and show them how things that people spent great amounts of money on are now sold for very little. Show them all the piles of “treasures” that were formerly Christmas and birthday presents now lie useless. Point out to them that some of the expensive stuff they buy may one day end up in the bin.

5. Save: Practice self-discipline.

Children learn the value of money and the discipline of self-control through saving. When your child wants a new toy that they don’t have enough money for, tell them to save up. Once they have enough, take them shopping and let them pay the cashier. They will never forget how good it feels to work toward a goal and be rewarded in the end. And once they get the item they saved for, they’re likely to take good care of it.

TIP: Tell your children to write their “wish list”. Sit down together and help them rank the list by discussing what’s important about each wish. Have your child set a goal, such as to buy a toy.

Make sure that the price is just enough for them to buy it in a few weeks instead of months to avoid them from getting bored or frustrated. Set them up for success! If your child has an expensive goal, come up with a matching program to help them reach it in a reasonable timeframe.

6. Give: Be generous. Sharing is caring.

Teach your children to keep a portion of their money and give it to your local church. Asking them to save the ‘tithe’ or ten percent is ideal since it is easy to compute. Even at an early age, they need to understand that giving is a habit that God wants his children to have in life. This teaches them to become generous and overcome selfishness.

Have your children donate a portion of their allowance to charity. It teaches them that money can be used to help people, rather than just for buying things. The habit of giving is like the divine habits of studying the Bible and praying. These things should be integrated into a child’s lifestyle at an early age.

Those not raised in a home where they learn this are at a great disadvantage later trying to develop new habits as adults. When we make decisions to give sacrificially to God’s kingdom, we need to include our children, so they can both learn and get in on the blessing.

How to be an effective model for our children?

Be an example.

The best way to teach a child is by example. Children learn most effectively not just from what we say, but from what we do. Our actions speak louder than our words. When it comes to teaching financial stewardship, the most important point is this: sometimes our children will fail to listen to us; rarely will they fail to imitate us.

Your children watch what you do so you need to show them the same smart financial habits you’re teaching them. For example, if you tell them you can’t afford something they want, then you buy that item for yourself, that sends a confusing message.

Spend time with them.

Influence is based on relationship: the deeper the relationship; the greater the influence. We know that good relationships take time. The quality of the relationship we have with our children is often determined on the quantity we spend with our children. Depending on what you feel your children are ready for, involve them in some family financial decisions, such as buying a new TV or gadget, or planning your next holiday.

Use every day ‘real life’ situations to train your children.

Life brings countless opportunities to teach our children about money. We’re told in Deuteronomy 6:6-7: “These words, which I am commanding you today, shall be on your heart. You shall teach them diligently to your sons and shall talk of them when you sit in your house and when you walk by the way and when you lie down and when you rise up.”

As Randy Alcorn says, “when it comes to handling money and possessions in light of eternity, the most important point is this: sometimes our children will fail to listen to us; rarely will they fail to imitate us.’