I have worked in youth ministry for many years. One of the many things that we learned in youth ministry is teaching youth about tithing their money. This also meant that we learned about teaching youth how to handle their money. There is an easy was for youth leaders and parents to teach children and youth how to handle money smartly.
Get a Piggy Bank with Compartments or Four Separate Banks
In order to teach children how to spend money wisely, it is important to teach them how to budget money for different activities. If children are never taught to budget money, it is likely that they will want to spend all of their money immediately. While parents can stop this for a little while by opening a savings account for a child, children will not learn about budgeting money if this is the only thing done. The piggy bank or banks need to be labeled or somehow designated for saving, spending, donating, and investing.
Give an Allowance
A child will never learn about money unless the child has money in hand to learn about it. This is why it is important to give children an allowance. The allowance doesn’t have to be big. It can be a dollar and this can be given each week or each month. If the child doesn’t have to do many chores, one dollar a month is easily an allowable amount for an allowance. If the child only had to do his or her own laundry for the week, a dollar for an allowance each week is an acceptable amount. In any case, the parent should decide what is the acceptable amount for an allowance.
Teach About Percentages
In order to spend and save money, a child will need to know about percentages. Teach percentages easily at first by using a dollar. A dime is ten percent of a dollar. Two dimes are twenty percent of a dollar. You can teach more about percentages as a child learns multiplication and how to find halves of numbers. It is easy to teach about percentages if you give the child an allowance of a dollar in ten dimes.
Budget the Allowance and Any Other Money
When a child receives money, make sure that it is budgeted properly and not all of it is spent at once. A good suggestion is that ten percent of the money goes to a church offering or donation, ten percent of the money goes towards investment, thirty percent of the money goes towards savings, and fifty percent of the money can be spent at that time or at least soon.
Donations, Tithing, or Offering
Ten percent is a common percentage for offerings and is known as tithing because of the practice in the Bible. Even if you are not religious, children should learn about being nice and helping others. If you are religious, your church’s offering is a perfect suggestion for the ten percent. If you are not religious, choose a favorite charity where the money will be sent.
While some people related investment to the stock market, it does not have to be for the stock market. Some people do not want to buy stocks and do not want their children learning about the stock market, either. An investment does not mean children have to invest in the stock market. Perhaps it means that they are contributing to what will be spent on a family vacation. If this is the case, parents should also show that they are saving for the vacation. Another investment could be saving up enough money to go out to a favorite restaurant to eat. Parents should decide if this is for the child’s meal only or if they want the child to learn about paying for everybody’s meal. It is suggested that ten percent of any money should be invested.
A child needs to learn to save money. This can be long-term and the parent can deposit the money in a child’s savings account when the section of a bank or the savings bank is full. It can also mean that once that section is full, the child is allowed to spend the money. It is suggested that that thirty percent of any money be saved.
A child will want to spend money. That is why it is important to have a section where part of the money earned can be spent. It is always the choice of the child to spend the money or save it. If nothing is wanted at the time parents allow shopping, the money can be stay in the savings and be spent later. It is suggested that fifty percent of any money can be spent.
Tools to Help
It is good to be able to have tools to help, although any four banks can be used for this purpose. Money Savvy Generation makes a Money Savvy Piggy Bank that comes in blue, red, pink, green, purple, and platinum. They also make a Money Savvy Football and Moolah the Money Savvy Cow.