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Dollars and sense: kids and money

by Arnold Machel, CFP®


Starting children on the road to financial freedom is something that can never be started too early.  In spite of the small dollar amounts involved, children who learn to control their money (as opposed to being controlled by it) have a significant head start in adulthood over those who aren’t given any training. At the end of the day it’s not the dollar amounts that matter. It’s the life lessons learned that make the difference.

As a financial advisor I’ve seen the difference it can make when parents do a good job of teaching their children about money. It was important to me to decide what items (financially speaking) I wanted to build into my kids’ DNA before they hit adulthood.

This is one of those “begin with the end in mind” things where giving thought to the end game is critical. Ask yourself, “What core principles do I want to teach my children about money?” Generosity – the habit of giving back; Saving – the habit of setting funds aside for the future; Freedom – spending guilt free (as appropriate); Thrift – spending wisely. These are the four principles that my wife and I decided were important to impart to our children.

We found that at a very young age our kids easily understood the terms tithe (one tenth) and halve, so I’ll call this the 10/50/50 rule although any true mathematician would correct me and say it’s actually a 10/45/45 rule.

As a side note, we did not pay our children an allowance.  They were given chores that they had to perform. We did not pay them for doing chores as that was considered just doing their part of sharing in the family workload. What we did pay them for were extra jobs over and above the typical household chores, such as shovelling snow, raking leaves, etc. and for small tasks they did for our business.

By making their income an easy number to deal with, we were able to help them develop the habits of tithing and of saving and also to create a healthy spending attitude.  Here’s the route we went:

Each child was encouraged to practice the 10/50/50 rule. They were taught first to set aside a tithe (one tenth) for giving away. We made sure to teach them how easy this was to do, i.e. if there were 10 one dollar bills, at least one of them should be set aside to be given back to God, where it all came from in the first place. The remainder was divided in two: one half to go into their long term savings tin which could be spent only with our permission. As the children grew this money went into their savings and/or investment accounts. The other half went into their spending tin which they could spend at their own discretion, with no permission from their parents required. This half later became their chequing account.

The children could, if they chose, put extra into their long term savings tin, but just because they put in extra did not eliminate the requirement to obtain our permission to spend it.

By starting at a young age, this process became the default even as they obtained their own jobs and transitioned from using savings tins to bank accounts. At first, as with everything, we had to be involved every time they received money. We would count off the dimes, quarters or dollars with them and divide it: first carving off a tenth and then splitting the remainder 50/50, but as time went on it was easy to back off. The math wasn’t difficult and we trusted them to do the right thing and let them manage it themselves, periodically asking them for confirmation that they were keeping on track.

This allowed the children to take ownership of their giving and their saving. It gave them the freedom to spend if they chose and it gave us greater freedom to say, “We’re not paying for that particular item, if you want it you’ll have to pay for it yourself” which led to good decision making skills.

A positive yet unintended side benefit of this approach was how it ended up teaching them not to be legalistic about it. At times (particularly when they were older) the money didn’t divide easily by 10 and then two. Rather than making change to get everything down to the penny, we would encourage them to give extra and/or save extra, taking the emphasis off spending and putting it on giving and saving.

There are many ways that you can teach your kids about money.  Our approach may not be what you’re after. We have three kids and they are still just young adults, so we’ll have to wait awhile longer to see if the end results are truly what we would hope for, but the beginning signs are good. I share this in the hopes that it will inspire you to give serious thought to what you want to teach your kids and then either come up with your own systems to do that or use ours.

Arnold Machel, CFP® lives, works and worships in the White Rock/South Surrey area.  He attends Gracepoint Community Church where he serves on the Leadership Team.  He is a Certified Financial Planner with IPC Investment Corporation and Visionvest Financial Planning & Services.  Questions and comments can be directed to him at or through his website at   Please note that all comments are of a general nature and should not be relied upon as individual advice. 

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