How can we help our kids be more responsible with their money?
It is fairly simple. By using what is called the "10-10-10-70" plan, it is possible to teach good stewardship principles to our children, not matter what their age. Whether it be their allowance, money for doing a specific chore or money earned from a paycheck, show your kids how to divide up their earnings according to the following:
1. They should set aside 10 % of their money for tithing. You can explain that the Bible tells us that because everything belongs to God, we are to give Him the "firstfruits" of our earnings.
2. Next, encourage your kids to set aside a second 10% of their money for savings and investment. If they don't already have one, take them to open a savings account. Then pick-up a kid friendly book on saving and investing, one that explains in simple language how interest compounds over time. For older kids, help them to open a brokerage account with an online brokerage like Fidelity or E-Trade.
3. The third "10" in the plan you teach them to dedicate to giving. This is going beyond tithing by distributing a portion of our money to help those who are in need. God clearly tells us to help the poor and this is something we should instill in our kids at an early age. Whether it be charities, ministries, a homeless shelter or a needy family in the community, possibilities are endless for those experiencing financial difficulties that need a little help.
4. The remaining 70% of their money can be used at their own discretion. Naturally, you'll want to teach them to spend wisely by purchasing items that have value and by saving money to make purchases for those things they really want.
(These principles also apply to us grown-ups who haven't mastered the skill of budgeting and wise spending as well.)
Your Kids Can Master Their Money, by Ron and Judy Blue and Jeremy White.