What is the best way to give children financial training?
July 1979

“What is the best way to give children financial training?” Ensign, July 1979, 21–22

Is it a good idea to share all of the family’s finances, problems included, with all members of the family? If so, what is the best way to give children financial training?

Robert D. Goodwin, assistant professor of education, Brigham Young University—Hawaii Campus Parents have three primary financial responsibilities in relation to their children. (1) To provide adequate shelter, food, clothing, and education: “All children have claim upon their parents for their maintenance until they are of age.” (D&C 83:4.) (2) To provide emotional security, free from undue anxiety and stress. I believe the Lord was referring to this need—which we all share to some extent—when he said: “Behold, ye are little children and ye cannot bear all things now.” (D&C 50:40.) (3) To teach children the proper way to handle finances: “Their children are also growing up in wickedness; they also seek not earnestly the riches of eternity, but their eyes are full of greediness.” (D&C 68:31.)

As we look at the adult world, we become immediately aware of the importance of finances in our lives. Proper handling of financial matters can help in finding happiness and well-being; improper use of financial resources often leads to broken homes, divorce, and personal destruction. And yet parents spend relatively little time teaching their children the principles of sound financial management.

In 1952 a friend of mine bought some scuba gear, and we decided to learn how to dive. We loaded the gear in a boat and went out in the middle of Los Angeles Harbor. I put the air tank on my back, fixed my mask and fins, put on some weights, placed the air hose in my mouth, tried breathing once or twice, and went over the side into the water. I almost drowned. But that is how people were learning to dive in those days—trial and error. After so many casualties, however, strict regulations were enacted and enforced for scuba divers. Schools have been established that allow the novice to master one skill at a time until he is ready for the deep dives. But you never dive alone, and you never go where you are not qualified to go.

Most of us, whether we agree with it or not, belong to the “sink or swim school” of financial management. At one extreme we push our young children right into the depths of financial affairs and expect them to learn how to swim. (We call this “reality.”) On the other extreme we never introduce the subject of finances until our children get married, and we literally shove them into the murky waters of financial responsibility without a lesson.

Although many survive the swim by at least learning how to dog-paddle, there are too many casualties from both extremes. The Lord has said:

“But I have commanded you to bring up your children in light and truth.” (D&C 90:40.)

Just as learning to scuba dive is a constant process of training and learning, of moving from simple to complex functions, so learning to handle financial affairs should be a constant process. Just as we never take the novice diver beyond his capabilities, so we should never take the child beyond his ability to conceptualize and to handle financial problems.

A sound financial training program beginning with pennies and tithing is best. A savings program should be started early. Children should be allowed to make choices regarding purchases. Then as children mature into teenage years they should be taught budgeting, legitimate uses of credit, investments, income taxes, mortgages, consumer protection, etc., by their parents. This area of responsibility is too important to leave solely to the schools. It is a part of family welfare.

By the time a child is eight years of age, he or she should make regular tithing contributions and have a savings account to which he or she makes regular deposits. The amount deposited is not as important as the concept that at least once a month the child will make a payment to the bishop for tithing and to himself for savings.

By the time a child is twelve, it would be appropriate to allow him or her to carry some regular monthly payments, such as a phone bill, a gas bill, or a house payment to an office and make the payments. At the age of fourteen each child should have developed a financial plan that will help carry him or her through a mission and college. Amounts to be earned and saved should be recorded.

As the child is gradually introduced to the advantages and problems of financial planning, he will be prepared to handle financial crises. If we remember that a crisis is merely a more complex problem than one is used to encountering, we have a perspective from which to work. The child will have already met a number of financial problems, and he or she will therefore be prepared for more complex problems.

There are, however, legitimate disasters that occur, some to the point of bankruptcy. Even a situation such as this may be used constructively to teach children. A family council should be held and the matter discussed. Emphasis should be placed on the welfare program of the Church, which begins with family support and then ward support. Faith in rebuilding should always be emphasized. If ward welfare is required, the family should discuss ways of working for that welfare, such as mowing the chapel lawn, cleaning the chapel, and helping on welfare projects.

A regular family council is also a good place to discuss such questions as “why are our finances tight this month?” and “what can we do as a family to cut down expenses?” It is a good idea to ask the children to identify areas where they can make a difference in family finances. In this way, children learn several important principles: how to spend wisely, how to meet a crisis, how to empathize with Dad and Mom, and how to work with them in overcoming the problem instead of adding to it by making unreasonable financial demands. Money management then becomes a family affair, with all of the children making a conscious effort to help out.

The parents need to talk with their children regarding each crisis that arises, in whatever depth appropriate to their maturity. If parents do not talk about it, their own fears and anxieties will be passed on to the children in some form. Parents experiencing financial stress often become irritable and defensive. Children tend to interpret this behavior as rejection, and often they view themselves as unwelcome burdens that only add to the financial problems. Such negative experiences create a tendency in children to avoid financial problems in later years instead of successfully meeting them.

When a crisis is encountered and the parents sense that they are becoming sharp and irritable with their children, it is time to talk to the children about the problem. It is a time to bear testimony and to exercise faith. It is time to see the Church in full operation with support from family, priesthood quorums, Relief Society, and bishop. Children should be allowed to experience the security of the Lord’s Church.

Should we, however, share all of the financial details? Should we use family finances as our teaching model? Our three primary financial responsibilities provide the guideline. We should share the details to the extent that we can provide adequate shelter, food, clothing, and education for our family; that we can provide emotional security, free from undue anxiety and fear; and that we can properly teach our children to handle their material stewardships here upon the earth.

Let us teach them faith, not doubt. Let us teach them sound financial planning, not fear. Let us teach them to swim before they are thrown into the deep water.