Financial Matters

7
Aug

Giving children an allowance

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by Crown Financial Ministries

“For whom the Lord loves He reproves, even as a father corrects the son in whom he delights” (Proverbs 3:12). Normally, during the first 10 years the basic attitudes of children are being formed.

Unfortunately however, it appears that discipline in spending is one attitude that has proved to be lacking.

A recent survey reports that although teens spend more than $80 billion a year, of which the majority has been funded by parental allowances, fewer than half know the basics about credit, checking, savings accounts, or auto insurance.

There is no such thing in God’s economy as an allowance.

The word allowance is a misnomer, because it means something that is given to someone and was not earned.

Although it is important that children receive money of their own—either through allowances or payment for jobs completed, so that they can begin to learn how to handle money wisely—parents need to be careful that they do not train their children to expect allowances rather than to work for what they need.

Rather than giving their children an allowance without any accountability, parents really need to teach their children financial responsibility with any money they receive.

Establishing an allowance

Setting up a successful allowance means talking with your children about what the allowance will cover, how they can spend it, consequences of overspending, how much should be saved, and how much should be given to the Lord’s work.

A weekly income helps children learn money management, responsibility, values, goal setting, and planning. They also experience the consequences of making financial mistakes.

Parents, in turn, are freed from the chore of being their children’s bank tellers, and they’ll find it easier to track how much money their children spend.

In order to ensure balance, parents need to be careful about setting allowance amounts. Children’s allowances should be enough to look forward to, enough to enable parents to begin teaching them God’s financial principles but not enough that all their wants and desires are met and they have no need for extra jobs.

Ultimately parents need to wean their children off allowances and onto their own earned income.

Therefore parents need to make sure that children’s allowance raises do not keep pace, percentage wise, with their budgets. Their allowance should become an ever-decreasing portion of their budget.

Allowance guidelines

Allowance amounts depend on several factors: age, maturity level, interests, responsibilities, and the family’s financial situation. Give enough to encourage giving to the Lord and saving, but don’t give too much.

At the beginning of each school year, sit down with children to discuss the allowance. Decide what things the allowance will cover.

Let children make decisions and mistakes with their allowance. Monitor spending and don’t give them more money when they overspend.

Put the allowance agreement and guidelines in writing, including the amount, what day it is given, what it covers, and any restrictions.

To keep up with children’s changing needs and current costs, review and adjust the allowance agreement regularly.

Be consistent: set a specific time and day to give the allowance and stick to it.

Don’t link allowance to routine household chores. Children have chores because they’re members of the family; they get an allowance to learn how to handle money. Linking the two may result in children who won’t do anything without pay or children who decide the money isn’t worth the work.

Don’t link allowances to behavior; it confuses the issue and can become a source of conflict and manipulation. Don’t use an allowance to punish.

Don’t use allowance as a bribe for good behavior. It’s okay to reward children for courage or especially good behavior, if the reward is given after the fact.

Be a good role model. Parents should teach their children that God owns everything by allowing them to see this principle at work in their lives, that the first portion of their allowance belongs to God, that they need to live on a budget, and that they need to exercise self-controland discipline in their spending.

Extra money

All children need some basic responsibilities for which they are not paid. Children make their beds because they sleep in them. Children help with dishes because they eat food and dirty the dishes. Children put dirty clothes in the laundry because they wear them, dirty them, and need them clean again.

As children get older, if they complete tasks over and above their regular chores—gardening, washing the car, cleaning the basement—it’s fine to pay extra for the extra work. If children say that they really need something, provide opportunities for them to earn the money, do not just give it to them.

However, the parent must be fair and pay the children equitably, according to what the parents are able to afford.

Before they get paid the parent should make sure that the children have done quality work, they have finished the jobs, and the parent knows and has approved how the money will be spent.

Conclusion

Each parent and child takes on certain responsibilities and also gains certain benefits from being a family member, much like the relationship of each believer in God’s family.

We each have certain responsibilities that must be carried out if the family is to worktogether, children included. Each family member receives benefits that come from working together and benefits from simply being a member of the family (such as an allowance).

By teaching that each family works and lives together for mutual growth and benefit, and putting allowances in that light, parents and children alike can establish the right attitudes and principles. The key is to give children their allowances and require them to do their household chores without tying the two together like a work-for-hire agreement.

We have responsibilities toward God in working for His good, but we also receive many blessings simply for being His children. We must use God as the best example of parenthood to our children because He balances gifts and rewards perfectly.

Visit Crown Financial Ministries for more articles and resources

Category : Financial Matters | Blog
23
Jul

Budgeting 101

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by Kathy Kirk

We have at our disposal many practical tools that will assist us with gaining financial freedom. The most important one is the Word of God. I once heard that there are more scriptures on money than any other subject in the Bible. The reason for this can probably be explained by Paul in 1Timothy 6:10 “The love of money is at the root of all kinds of evil.” So let’s not ignore how managing our money influences our relationship with God. The management of our money also reflects our love for God. Obedience to God’s Word is an indication of our love for Him. A spending plan is another tool that can be used to help you manage your money wisely.

Step 1: Identify Your Income

Income is any money coming in on a regular basis.

Step 2: Estimate Expenses Each Month

Identify what you spend your money on monthly.

Step 3: Define Your Spending Goals

Determine your financial goals and incorporate these into your

budget.

Step 4: Complete Your Budget

Your budget can be as elaborate or simple as you want. My

book has a very simple format that you can use, “Faith the First

Step to Financial Freedom ” for additional forms.

Step 5: Analyze Your Current Situation

Determine whether your expenses exceed your income. At this point, you may have to make decisions to eliminate some expenses or increase your income.

Step 6: Adjust Your Spending Plan

Make the necessary changes to your budget to balance your

budget. At this time, your income should equal your expenses.

2005 Copyright, Kathy Kirk. All rights reserved

Category : Financial Matters | Parenting Tips by Kathy Kirk | Blog
21
Jul

Creating Your Own Personal Financial Plan

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By Mark Biller

© Sound Mind Investing | January 2002

[A question I hear frequently during my radio appearances is "What's the most common mistake people make when managing their finances?" My answer: making spending and investment decisions apart from a personalized financial plan. No matter how good your investing choices are, if they're made outside the framework of a larger plan, you're inviting trouble. Read on to discover the main bases you'll want to touch as you construct a solid financial plan of your own. Mark Biller is the editor of SoundMindInvesting.com, the web home for the Sound Mind Investing family of readers. — AP]

Imagine that you’re preparing to build your dream home. Over the years, you’ve accumulated scores of ideas that you’d like to see incorporated into it. Before construction begins, you sit down with your builder to review your design goals. You ask him how long before the blueprints will be ready, but to your surprise, he tells you he doesn’t work that way. Rather than planning everything ahead of time, he prefers to develop the design as he goes along. He’ll keep your ideas in mind, but “blueprints are so restricting,” he says—he wants to have the freedom to be spontaneously creative as the house is being built.

Most of us would be reluctant to hire such a builder. When building a house, we recognize that it’s a good thing to have a carefully considered blueprint for action before taking on a challenging task. In fact, the more important the project (e.g., having open heart surgery or fighting a war on terrorism), the more emphasis we place on careful planning.

Unfortunately, too many people use the “we’ll work out the details as we go along” approach when it comes to one of the most important projects they’ll ever take on—building a secure financial future. Yet, in much the same way that we live in a physical home, we each “live” in a financial home as well, one that has been created by our past decisions. Just as our dream house could end up poorly designed due to a lack of planning, so do many people reach retirement and find their financial home isn’t what they had hoped for. That’s usually what results from a lifetime of making financial decisions independent of a master blueprint. Don’t let this happen to you. Get 2002 off to a good start by setting aside time this month to create a personalized financial plan that’s designed to build the kind of future financial home you’ll enjoy living in.

In a moment, we’ll look at typical planning situations for three couples at various stages of life. But before we do, let’s examine two basics common to every financial plan. The first is the necessity of developing a clearly defined set of God-given goals. Clearly defined goals establish your financial priorities. In his book, Storm Shelter, Ron Blue lists the following five steps for setting good goals: List your goals, consolidate and refine them, prioritize them, make them measurable, and keep them visible. The monthly surplus established by your budget is the wind in your sails, but your goals are the compass you navigate with. Set good goals and keep them in front of you—you’ll be surprised at how much more productive and focused you’ll feel as you start living with clearer purpose.

The second common denominator of all good financial plans is a spending plan (i.e., budget). You may not like it, but it’s an absolutely essential tool for everyone who hasn’t yet received a seven figure inheritance. Without a spending plan, you can’t intelligently implement saving and investing strategies because you don’t know if you have any extra money to save or invest.

Even if you seem to have extra money left over each month, without a budget you won’t know if that money should be saved for those once-a-year items (such as insurance premiums and summer vacations) or if it truly represents a surplus. Also, it’s unlikely you’ll be in a position to give generously to God’s work if you don’t plan for it.

As you work through your goal-setting and spending plan, don’t make the mistake of leaving your “Christianity” on the sideline. Your personal financial goals and budget will reflect how you view and use money. Since, as Christians, we are managers rather than owners, it’s vital that you allow God to speak to you regarding your plans for His money.

Married couples should absolutely make these planning decisions together, not just because it ensures “buy-in” from both parties, but because it establishes you as a team rather than opponents. One-half of marriages end in divorce, and 80% of those are due, in part, to money problems. Jointly establishing a financial plan may have farther reaching implications than you think.

While there are no “one-size-fits-all” financial plans, certain experiences are common to particular phases of life. As you read the following scenarios, don’t get discouraged if you feel “behind.” The point is not to provide benchmarks of how far along you should be, but rather to provide guardrails to keep you on track and to help you think through issues common to each phase. Your situation will probably differ somewhat from what’s here, so make sure to personalize these to your individual circumstances.

Category : Financial Matters | Blog