I promote the idea of attaining financial literacy and
wealth, now please understand that I believe God gives us everything and can
take it away. We also cannot take it
with us but does that mean we are not good stewards of what God has blessed us
with in the interim?
“So if you have not been trustworthy in handling worldly
wealth, who will trust you with true riches?” Luke 16:11
I build wealth for the sole purpose of having control over
money in my life and using it for good causes and to eventually retire young
and have the time and resources to commit my life to worthy organizations and
I teach my kids these same principles not because I hope they will become rich and famous someday, but for the sole fact that I want them to have a working knowledge of finances and how to be in control of them rather than money controlling their lives.
I read countless stories of Christians and Non-Christians
struggling with money, debt and not knowing how to get out of the situation, so
I choose to educate my children from an early age to be in control of money,
manage it properly and use it for good.
“The wise have wealth and luxury, but fools spend whatever
they get.” Proverbs 21:10 (NLT)
When my children were around 5 years old, we implemented a special
teaching tool in our household, the 3 Jars. The 3 Jars are 3 large pickle jars that sit in our children’s room; each
one is labeled for its purpose. Charity,
Investing, and Spending. Our children
are given $5 per week to manage. From
this $5, one dollar or 20% goes to charity, two dollars or 40% go to investing
and two dollars go into spending. They
also split all money received from birthdays, Christmas, grandparents, etc in
this same way.
The charity money goes to church, church functions, youth
groups and even homeless or poor people. From an early age, my kids understand that giving is a part of the money
process and that all this money is really God’s in the first place so we need
to give it back to causes that support God’s work.
“Honor the LORD with your wealth, with the firstfruits of
all your crops” Proverbs 3:9
The investing money sits until it accumulates to around $100
and then it is placed in my children’s investing account, this is then matched
by my wife and I similar to what a 401k does. I place the money in investments and sometimes the kids also research
investments and decide whither to invest in them or not. They are learning from an early age the
process of investing and compounding interest. Last week my kids made a paper
profit of $1000 in their accounts from a stock I selected, my son said he
mentioned it at school to some of his friends but none of them believed
him. However, we were practicing math in
a food court a few nights ago and I asked my son “What would be a good return
on investment?” My son replied “20% ROI” A couple sitting next to us overheard it and were amazed, they also said some encouraging comments to my son. The amazing part is not what my son said, but
that an 8 year old understands a financial concept that most adults do not.
“A good man leaves an inheritance for his children's
children, but a sinner's wealth is stored up for the righteous.” Proverbs 13:22 (NIV)
The final jar is spending. Once a month we have spending day, the kids can take their money and buy anything they want or they can decide to save that money until the next months spending day to buy something bigger or more expensive.
Since we have introduced this concept we have seen amazing results. Our children understand giving and charity and often come up with their own ideas on how to give to charity. Our children understand that investing money and getting a return is a smart way to make money work for you rather than against you. They are also learning delayed gratification, that if you want to buy something, you may have to wait until you have all the money to purchase it. These simple skills will be ingrained in them for their entire lives as a result of the 3 Jars. Most adults I meet with financial problems have not learned the lessons of the 3 Jars which is why they are struggling.
The next step for our children will be getting their own checkbook (at age 9) that requires a parent also sign the check. We will place money in their checking account and then they will have to buy items like school clothes, shoes, school items and other relevant purchases. The idea here is that the kids will have to decide, "Do I spend all my money on a $100 pair of Air Jordan’s?" Or do I buy a more practical pair and also buy some new pants and shirts?
Financial education is not taught in schools, it is taught in the home. It is up to the parent to set the example in all areas including money.
What example are you setting?
Do you tithe and give to charities?
Are you investing regularly?
Are we delaying gratification or buying that new gadget on credit?
Whatever example you set in your home, your children will take with them the rest of their lives. While the 3 Jars do not guarantee your children will not face financial struggles, it does give them a foundation based on biblical principles to understand how to face those financial struggles.
“Direct your children onto the right path, and when they are
older, they will not leave it.” Proverbs
The chart below gives you an idea of what is possible in the investing column using this 3 Jar method.