Art Linkletter once asked a four-year-old boy, “What do you want to be when you grow up?”
“I don’t want to be anything,” the boy replied.
“Don’t you want to get married?”
“If I have to.”
“And how will you get money?”
“My wife can work.”
“But suppose she won’t?”
“I’ll send for my mother.”1
What are some surefire ways to make a person fall in love with you?
“Tell them that you own a whole bunch of candy stores.”
—DEL, AGE 6
He must manage his own family well and see that his children obey him with proper respect. (If anyone does not know how to manage his own family, how can he take care of God’s church?)—1 TIMOTHY 3:4-5
Discipline your son, and he will give you peace; he will bring delight to your soul.—PROVERBS 29:17
You’re already on the right track.
By starting to read this book aimed at equipping parents to teach financial principles to their kids, you’re acknowledging your role.Whether you like it or not, as a parent you realize you have some role in teaching your kids financial principles. Somehow, somewhere, in some way, you’ve sensed that raising money-smart kids is important.
Perhaps you want your kids to avoid some of the financial struggles you’ve experienced.
Perhaps you’re tired of fighting the daily dollar battles with your kids. Your son expects you to spend big bucks on name-brand athletic shoes. Your daughter thinks she’s entitled to designer clothes because “everyone else” has them. You’re tired of your kids begging to order the most expensive item in the restaurant plus an appetizer and dessert.
Perhaps you realize that financial wisdom will help your child in so many areas of his or her future. A major factor in most divorces is poor financial management and the resulting stress.Many people are stuck in jobs they don’t enjoy because they’re trapped by their poor financial decisions. Many Christians aren’t experiencing spiritual maturity and the joy of giving because they’re “slave to the lender.”
Perhaps you know you have some self-interest in this matter. A big motivation for parents is to avoid “boomerang kids.” After enjoying an empty nest for a while, you don’t want it to be filled again with 27-year-old birds who should be flying on their own. As our friend the late Larry Burkett said, “I wonder if parents would be more serious about teaching their kids financial principles if they realized their kids would be choosing and paying for their nursing home someday!”
The statistics show you’re on the right track. The evidence is clear. Five powerful trends, supported by many studies and surveys, point toward the necessity of teaching the next generation the truth about financial principles. (Note: Unless otherwise stated, the following figures apply to the U.S.)
• A Visa survey found that 49 percent of youth think they’re more likely to become millionaires by starring in a reality TV series than by learning how to budget and save wisely.
• A Consumer Reports survey found 28 percent of students didn’t know credit cards are a form of borrowing, and 40 percent didn’t know that banks charge interest on loans.
• The National Center on Education and the Economy found that nearly two-thirds of American adults and students didn’t know that in times of inflation, money loses its value.
• Between 1990 and 1999, there was a 51 percent increase in annual bankruptcy filings among adults 25 years of age and younger.
• MarketResearch.com reports that in 2003, teens spent $175 billion, averaging $103 per week. The so-called “tweens,” 8-to-14-year-olds, spent $39 billion in 2003.
• Younger kids directly influence the spending decisions on their behalf to the tune of $117 billion.
• Marketers target children as young as 18 months.2
• By the time your kids reach 21, they’ll have seen or heard an estimated 23 million advertising “impressions.”3
• One consumer-marketing group reported that today’s kids will have seen 360,000 30-second TV commercials by the time they’re 20 years old.
• One-third of high school seniors use a credit card. Not surprisingly, seniors who used a credit card scored significantly lower on a national, personal finance literacy survey than seniors who didn’t use a card.4
• More than three-fourths of college undergraduate students have credit cards; most have multiple cards with an average unpaid balance of $2,748. Ninety-five percent of college graduate students have cards; each has an average of four cards with an average unpaid balance of $4,776.
• Eighty percent of parents surveyed believed that schools provided classes on money management and budgeting.
• Only seven states require students to complete a course that includes personal finance before graduating from high school.5 As a comparison, sex education is taught in 90 percent of public schools starting in fifth grade; it’s a required course for 69 percent of schools.6
• Much of the limited curriculum available in schools is provided at no charge from various education coalitions. Usually the main funding sources of these coalitions are Visa, American Express, or other credit card companies (not exactly the most impartial source of wisdom).
• Pastors are frequently silent on the topics of money and stewardship.
• Very few evangelical churches have active stewardship discipleship courses for equipping young people to handle money from God’s perspective.
• The American Savings Education Council found that 94 percent of kids turn to their parents for financial information.
• Sixty-three percent of older teenagers, notorious for knowing it all and not listening to parents, say they get most of their information on money matters from their parents.7
• The Financial Educational Survey by Capital One found that more than 70 percent of parents say they have spoken with their teens about credit and using credit cards wisely; less than 44 percent of the teenage children of those respondents say their parents have talked to them about credit cards. Meanwhile, 54 percent of parents rate their teenagers’ knowledge about managing money as “good” or “excellent,” while an overwhelming 78 percent of the teenage children of those respondents rated their knowledge as merely average or even poor.
• The Jump$tart Coalition survey found that only 26 percent of 13- to 21-year-olds reported that their parents actively taught them how to manage money.
• One study estimated that most church giving comes from people over age 55.
• Barna Research Group found the following in its 2003 survey of giving in churches: The mean amount of money donated to churches and other worship centers in 2003 was $824. This is less than the inflation-adjusted amount for 2000. The segments that were least likely to tithe included adults under 35 and those from households with a gross income of $40,000 to $59,999.
• Howard Dayton, CEO of Crown Financial Ministries, has stated that many pastors have told him most of their giving comes from members over 65. They estimate that it takes five people under age 35 to replace one senior’s giving.
The evidence is clear: Kids need financial training, and they need it from you.
We know you have urgent tasks on your to-do list: chauffeuring your kids to the next music lesson, attending their next ball game, trying to get them to do their homework, and prying them off the Internet. Such is the tyranny of the urgent in modern life. The ringing phone and the broken garage door opener tug us away from the truly important, eternal issues like daily prayer time and nurturing our children. Our aim in this book is to help you complete the truly important task of equipping your children to do well in an area crucial to success—wise money management.
How do you teach your kids to master their money? How can they be generous givers, sharp shoppers, savvy savers, prudent planners, intelligent investors, and willing workers?
Kids learn about money from you as parents and from their own experiences. Notice that we didn’t say they learn much at school. How ironic that they go to school to learn how to be successful in life, but don’t learn how to manage money wisely! In fact, the mere act of going to advanced schooling may result in huge student loan debts.
When your kids learn from you, you’re either teaching intentionally or inadvertently—the latter through the habits they observe. Teaching intentionally is better. You do that by sharing truths “as you go” or by creating experiences that help kids learn.
Let’s look at these methods a bit more closely.