Money Principles

                Wise parents teach correct money principles to their children.  Children must be taught that money is a tool for their use. They must be taught to use money correctly.  When families use money honestly and correctly, they strengthen their communities and nations.

                Many believe that “money is the root of all evil,” but they are wrong.  According to the Apostle Paul, it is the “love of money” that is the “root of all evil” (1 Timothy 6:10).

                Money can be used to purchase many things, but other things are priceless.  We can buy weapons to wage war, but peace in the world cannot be purchased.  Money can buy political influence, but it cannot purchase respect or a clear conscience.  No matter how much money we have, we cannot lengthen the day.  Money cannot buy common sense, integrity, happiness, a happy family, good friends, or a good reputation.  A certain amount of money is necessary to live; however, once a person has that amount and some to spare, money adds nothing substantial to life.

                So, how do parents go about teaching proper money management?  Jenniev J. Poulson, Ph.D., and John R. Christiansen, PhD., have some answers for parents in their article entitled “Can Children Learn to Manage Money?”  The main ideas are as follows: 

                (1) In order for children to learn to manage money, they must have some money to manage.  “One study has shown that children who were given actual experience with money had more knowledge of money and its use than children who lacked such experience.”  Parents should not simply “dole” out money to their children.  “The child who earns his money, either in or out of the home, is learning more about what money means in terms of time and effort than the one who receives his money either as a dole or an allowance.”

                (2) The amount of a child’s income can be increased as responsibilities are increased.  “Getting a sum of money at a regular time and making it last is a way to teach the child to make choices and assume responsibility in money matters.  It helps the child to think of money in terms of the value of things it will buy, to save toward future goals, and to shop carefully.  This is the beginning of budgeting.  How much allowance a child should receive depends on his maturity and the financial circumstances of the family…. As a child matures and can accept greater responsibility, he should be given progressive increases in income and in the associated responsibilities.”

                (3) Sharing family financial planning with children can help them see how his allowance and responsibilities relate to the entire family.  “A child may be unreasonable in his demands on the family income if he has no knowledge of the family finances, whereas he may be very considerate if he does have this knowledge.  Early responsibility in family conferences will help in creating a positive attitude on the part of the child.”  Children should be aware of the important facts about family problems and obligations “as early as he can understand what it is all about, and this point is often reached earlier than we think.”

                (4) Wise parents allow their children to feel the consequences for spending their money unwisely.  If a child spends all their money before their next payday, parents can “loan” money to them but always with a definite payback time.

                (5) Parents should give their children opportunities to learn how to save money for something “concrete” rather than spending it all on treats or trifles that soon lose their attraction.  “When people save, most of them do so with a definite purpose in mind.”

                The authors concluded their article with this quote from an Iowa State University Cooperative Extension Service publication of 1962:  “Positive guidance recognizes (1) that each child needs help in his own way, and (2) that guidance is parent-child teamwork.  It involves good coaching (suggestion but not dictation of every decision) and praise for worthy accomplishment, not `I told you so’ when decisions do not work out perfectly.  Avoid making comparisons with other children.”

                The late Elder Marvin J. Ashton (1915-94) of the Quorum of Twelve Apostles wrote an article entitled “One for the Money” and gave twelve “recommendations for improved personal and family financial management”:

                (1) “Teach family members early the importance of working and earning.”  This counsel is “basic to personal welfare.”

                (2) “Teach children to make money decisions in keeping with their capacities to comprehend.”  Telling children to “save your money” is much different than “save your money for a mission, a bicycle, a doll house, a trousseau, or a car.”  Unity in families comes from saving for “a common, jointly approved purpose.”

                (3) “Teach each family member to contribute to the total family welfare.  Encourage fun projects, understandable to the children, that contribute to a family goal or joy” such as supporting a sibling on a mission.

                (4) “Teach family members that paying financial obligations promptly is part of integrity and honesty development.  Paying tithing promptly to Him who does not come to check up each month will teach us to be more honest with those physically closer at hand.”

                (5) “Learn to manage money before it manages you.”

                (6) “Learn self-discipline and self-restraint in money matters.  Such conduct can be more important than courses in accounting.”

                (7) “Use a budget.  Avoid finance charges except for homes, education, and other vital investments.  Buy consumer durables with cash.  Avoid installment credit and be careful with your use of credit cards…. Buy used items until you have saved sufficient money to purchase quality new items.  Save and invest a specific percent of your income.”

                (8) “Make education a continuing process.  Complete as much formal, full-time education as possible.  This includes the trade schools.  This is money well invested.  Use night school and correspondence classes to further prepare.  Acquire some special skill or ability that could be used to avoid prolonged unemployment.”

                (9) “Work toward home ownership.  This qualifies as an investment, not consumption.  Buy the type of home your income will support.  Improve the home and beautify the landscape all the time you occupy the premises so that if you do sell it, you can use the capital gain to get a better home.”

                (10) “Appropriately involve yourself in an insurance program.  It is most important to have sufficient medical and adequate life insurance.”

                (11) “Strive to understand and cope with existing inflation.  Learn to see through the money illusion and recognize the real value of money….  Realize that you are living in a new era of higher prices….”

                (12) “Appropriately involve yourself in a food storage program.  Accumulate your basic supplies in a systematic and an orderly way.  Avoid going into debt for these purposes.  Beware of unwise promotional schemes.”

                Elder Ashton said these suggestions “are not intended to be all-inclusive nor exhaustive” but merely suggestions for “serious consideration.  We need to recognize and be aware of these basic guidelines for wise money management.”  We should also include prayer in our planning.  God has the ability to help us learn to live within our means.  “God will open the windows of heaven to us in these matters if we will but live close to Him and keep His commandments.”

                Wise parents will focus on teaching proper money management to their children.  When the living generation earns and spends money responsibly, they help to strengthen their families, communities, and nations.