Serve, Save, Spend — Teaching My Daughters About Money

Reframing Finances in Our Family

“If you don’t teach your kids how to manage money, somebody else will.” — Dave Ramsey

This year my five-year-old just started Kindergarten. In our house, we are going to be the teachers and one thing we wanted to make sure we do with our daughter early is to teach her about money. This is important as my wife and I work hard to create a stable financial environment for our children.

When I first started looking around for ideas to help establish money and how to budget, and how to grow a habit of saving, it dawned on me that the more simple the system, the more likely she will pick it up.

And what is really important is that she will draw on her early lessons later in life from how my wife and I helped teach and lead in this area of life.

After all, more and more people fall into the trap of consumer debt every year. They buy more than they can afford and then are now burdened by credit card payments, student loan debt, auto loan debt and so much more.

What if, in our little culture and our little home, we can help change that with our little girl?

Poverty Mindset: Fear and Money

Growing up, I lived on a family farm in eastern Washington state. And my parents did a great job keeping me from the fact that some years were so tight we could barely afford anything.

As I got older, right before things got a lot better, I learned that the family farm could have loads of debt, like in the hundreds of thousands. And while I am sure my parents didn’t want this to be something stick with me, it did.

I fell into a mindset where there was a fear of money. The fear grew into this idea:

“There will never be enough or there might be, but it will be gone tomorrow.”

And this fear has been a narrative which I have prescribed to for years. The problem with this fear is that it causes me to react to money in different ways. But most of all, it makes me swing in extremes about it.

I either want to be extremely frugal and not spend anything. Or I want to spend what we have so we can make the most of it before it could disappear on us again.

Well, this causes problems because it has a severe focus on scarcity. And when we focus on scarcity, we will always feel that we don’t have enough. When we always feel this way, we will make it a reality every. single. time.

When I realized this was true of me came when I read this quote by Kris Vallotton in his article, Do You Struggle With a Poverty Mentality:

“They always feel like their resources are limited.”

I was the ‘they.’ And I realized I needed to get out before transferring this to my daughters. It was time to make a change.

Note: It isn’t easy by the way, I still have to work through this mindset every day as I handle our finances, but it is getting better.

Abundance Mindset: Freedom from Money

I have been establishing in myself and working hard to establish in my family an abundance mentality. As I noted earlier, this has been hard, but I think it is getting better.

There have been a few things that are true when we live in a mentality of abundance. And the way to do this is to start with what we have and what we can do with it.

When my great grandfather was a farmer, he would trade what he had for what he needed. He wasn’t always making actual money, but he was bartering for what he needed to support his family.

And this is true of us today to some degree. We barter what we have (money) for what we need (the amenities of life).

When we stop looking at money as a number with a bunch of zeros behind it and start looking at is as a resource we can change our thinking. We begin to understand we have a lot anyway.

However, we can only do this if we are being proactive with our money. We are proactive by doing the following:

Having a plan for our money.
Deciding what we want to do with our money.
Knowing where our money goes every month.
Sticking to the plan.
Constantly focus on what works for using and maintain our resources.

I think the abundance mindset focuses more on what we have and less on what we don’t have. And it is driven by proactive thinking, not reactive thinking.

Once we establish this, we can move on to teaching our kids about money.

Serve, Save, and Spend

First off, I love alliteration and I could not help myself with this system. I also know that it helps kids learn things, so that’s why I did it. Also, I wanted to help my kids learn the typical budgeting methods in an easy way.

When we live in abundance, our money goes three ways:

Serve: Giving, Tithing, and Philanthropy
Save: Retirement, Buying a House, College, Buying a Car, etc.
Spend: Bills, Groceries, Gas, and other Daily Expenses.

Now, most kids are very visual, and I know some of the things that were engrained in me at a young age I remember what they looked like, so my system works with three clear jars. These jars will represent each use of money.

How Will Our Children Receive Money?

Something else I want to note. I’m not very keen on the idea of an allowance. And here’s why:

“When it comes to allowance, if we pay our child to do chores, will they turn into entitled beasts? If we pay kids an allowance that’s not tied to chores, will they become even more entitled by thinking they get money for free? What is a parent to do?” — Liz Frazier on Forbes.com

When I think of allowance, it is a sum of money given to you for no reason. I don’t like this one because I want my kids to learn they have to work for money, and for some reason, just giving my kids an allowance doesn’t sound very inviting.

However, I also don’t want them to become slaves to a job or to doing a bunch of things around the house in order to make as much as they want in order to get whatever they want.

Liz shared in her article about a happy medium ground which is likely the approach we will take.

Basically, they get a flat rate (Say $5) for doing things which contribute to the household. And they can make extra if they help with additional chores or projects.

This seems to be a fair compromise to the allowance debate. Thought I would love to hear what others are doing or have done (share in the responses below!)

However, what do we teach them once they earn a few dollars?

Serving with our Money

Most of the budgeting information out there talks a lot about the 80/10/10 idea. 80% of your income goes towards expenses, 10% to savings, and 10% to give. And this is probably where we will start out with our kids.

Thought I want them to think bigger when it comes to serving with their money. After all, with an abundance mindset, how can we bless other people more with what we have?

Though, to start, we will focus on 10% to serve. And the great thing is our church has a little tithing box in the children’s ministry so our kids will be able to experience the joy of giving.

Saving our Money

Next, we will focus on the saving aspect. Again, the traditional 80/10/10 model says to save at minimum 10%. Though, I hope we can give examples where more can lead to enjoying life with our resources more.

However, I have read in so many places that a ‘piggy bank’ is good, but clear jars are better because they help kids to see the saving build up over time.

And so, we will probably start using the clear jar, until it is full. Once it is full, move those little funds over to the piggy bank.

Spending our Money

Now that we have established with our kids that 20% comes out right off the top, we can start to establish how we spend the rest. With the clear jar method, they can see the money add up.

And as they come across something they want they can purchase it themselves. However, I plan on throwing a twist. They will get to help buy things we use as a family.

As their jar builds, we will help them see how they can “help” pay for groceries by taking some of their funds out to buy milk, or eggs, or something that we use every day. So they can truly understand the spending category.

This is Only the Beginning

And as the girls get older, we will establish more habits, get bank accounts, and take on more complex ideas. However, this is the base which I want them to start within life.

If they can have an abundance mindset, know that they will need to work for their money/resources, and learn how to serve, save, and spend, I hope it will give them a solid foundation.

And the foundation is one of abundance. Learning to live within their means and live well. Because I don’t want them to experience the stress and fear that I have for so many years. I want them to experience freedom.

When it comes to money, budgeting, and living, how do you teach your kids? Share in the responses below!