Before your children leave your home, teach them to be financially responsible. Budgeting is simply dividing income into smaller pieces and distributing it among necessary (and sometimes unnecessary) expenses. Teaching young people to live within their means, or to spend less than they earn, will result in a financial freedom that few in our country enjoy. Many think that a budget is constraining, but I think it is the opposite. Once the envelopes are filled, you know how much you can spend without worrying about meeting financial commitments.

When the children were in middle school we began to give them an allowance. This money was to be divided between long and short term spending items, as well as long and short term savings. They were taught to make a habit of giving a percentage of their income to those ministries or non-profit organizations that they felt felt worthy of their support. Their short term savings was for things like gifts or school clothes. Long term savings was for things that might take a year or more to save up for. They had a miscellaneous envelope for things like movies, fast food, toiletries. The allowance was given as long as all their household chores were completed each week. We found that giving an allowance gave the children an opportunity to make choices with their money and we saw those choices become more wise with time.

We all learn by example and by mistake. Giving your children opportunities to learn by mistake when the stakes are low and the consequences are minor can teach them how to avoid making the bigger mistakes in the future.