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According to government statistics, the average family has nine credit cards. There are more than 700 million credit cards in circulation. More than $1.5 billion is spent using credit cards every year, and 115 million Americans carry balances from month to month —“revolving credit,” as they say. In the year 2000, more than one million households declared bankruptcy — 10% of those were young adults 18-25 years old.

Each year, Americans charge more than $51 billion for the purchase of fast foods. Forty percent of American families spend more than they earn, and 96% will retire dependent on the government.

Frightening, isn't it? Is it any wonder church leaders counsel members to get out and stay out of debt? Are children being set up for the same fate as previous generations of spendthrifts?

Most of us have experienced the stress caused by severe financial strains. Some money worries are unavoidable, such as debt for an education or to purchase a home, or the loss of income from unemployment or disability. Yet more than 40% of all divorces are due to financial challenges.

Children who are taught good habits are far more likely to be wise money managers as adults. They can understand and practice wise budgeting and spending habits, even when very young.

Remember home economics classes? They used to be universally taught in schools to help students learn home management skills before venturing out on their own. These classes are now few and far between — the victim of overspent and underfunded school districts. The responsibility to educate children about home management skills is now solely vested in the family.

Begin Today

Financial responsibility is like other responsibilities — it takes time, practice, commitment, and understanding before it can be perfected.

Meet as a family and discuss the importance of being financially independent and the importance of staying out of debt. Debt takes a huge toll, physically and spiritually as well as financially. Therefore, the objective is to teach the skills that promote peace of mind and prosperity.

Those who manage money well create more wealth than those earning the same income who spend all or more than they earn, because living within your means enables savings and investment.

How Old is Old Enough?

When children begin to ask for things that cost money, such as toys at a store or money to use in a gum ball machine, they are old enough to begin earning and managing money. Our four-year old grandson was so excited recently when he finally had enough money to buy “Doc Hudson,” a toy car from the movie Cars. He even called us on the phone to share the good news.

Begin by establishing a list of household chores that every member of the family will have a responsibility to help with. These may include keeping their rooms clean, making their bed, setting and clearing the table, sweeping the floor, putting away their clean clothes and so on. These are responsibilities that go with being a member of the family and families share work and help each other.

Establish an Allowance

Once household duties are established, introduce the idea of an allowance. The purpose of an allowance should be to establish a habit of saving and budgeting. This money will be paid to family members as they perform their chores around the house. These could include other light duty household activities like taking the newspaper out to the recycling, taking out the garbage, mowing the lawn, dusting, vacuuming, doing laundry and cleaning bathrooms — anything that needs to be done daily or weekly to keep the home clean and orderly.

Of course these chores will change as the child grows and can handle more complex responsibility. An allowance should be limited and should not enable children to purchase everything they want.

Wants and Needs

Help your children understand the difference between a “want” and a “need.” A need is something you must have to live and function each day. A want is something that will make your life more rewarding but is not necessary to survive. New running shoes may be a need, but designer brand running shoes are a want. A cell phone may be necessary to communicate with your family, but mobile web browsing and video playback are not.

Children can be part of the decisions that rank the wants and needs of your family (from most important to least important). Compose a list of each family member’s wants and needs. Determine which needs you will pay for and which ones they will take responsibility for. Naturally, all wants are their responsibility, not yours.

Coco Chanel, who sold perfume to the rich and famous, wisely observed, “There are people who have money and people who are rich.” We can teach our children that real wealth is in being master over needs and wants.

Paying Jobs

Compile a list of jobs you are willing to pay for. When our children turned 11, they assumed the responsibility of purchasing their own clothes. We provided them with jobs around the house to begin earning money. They also received money as gifts from extended family and they could determine how to spend that money. Pay well, because after all, your children will need clothes. They can either work to earn them, or you will buy them without having helped them to learn money management skills. Either way, you pay.

Post a list each week of jobs you need done and your children can choose which to do. Of course, you will pay more for the less desirable tasks. Our four-year-old grandson earns money helping his dad stack wood in the shed and also earns for bringing it into the house. A wide variety of jobs will allow young children to feel successful also. Be sure to clearly define which jobs are available only to the youngest members of the family.

Discuss Goals

People who write down their goals are far more likely to achieve them. There are three categories of budgeting goals ? immediate, short term and long term. Using the wants and needs list you compiled, divide the goals into these categories.

An immediate goal, one that needs to be met very soon, may include buying or making school lunches, purchasing a book that is needed for a class, paying a library fine, or buying a new toy.

Short term goals are further out (1-5 years) and may include such things as a mountain bike, laptop, tickets for a dance, or new clothes.

A long term goal could include a car, or your graduate's senior trip. You may want to prioritize some long term goals, such as a full-time mission or education fund.

Explain some of your family's financial goals — a family vacation, a new kitchen table, improving your food storage, or paying off your consumer debt.

Establish a Budget

Once you have established a few goals, explain that they must allocate their money each week. Set limits on what part of the budget is spendable, and discuss what percentages should go to savings for long term goals, for tithes and offerings, and for immediate needs. Purchase piggy banks or just use pint size canning jars, labeled with each category.

For children who are eight or older, take them to the bank and have them establish a savings account. This will help prepare them for banking in the future. Have the bank employee explain interest, how their money will grow. At the end of each week, have the children count their money to understand that it is growing.

But I Want It Now!

Do not give in and bail out your kids when they want something now! Do not purchase several things from their wants list as gifts. One or two is fine for a special occasion like a birthday or Christmas, but you will not teach them anything if they never feel the sense of accomplishment from saving and purchasing an item they really want, on their own.

All of us, even the youngest among, us take better care of items we have saved and sacrificed to purchase. The Schwinn bike my husband earned and bought when he was eleven hangs in our garage even today.

As an incentive, consider matching any money they place in savings above the percentage you have agreed upon. With older children, discuss income and expenses and help them plan for upcoming expenses.

Let Them Make Mistakes

Debt among college students is staggering. Now, while they are still living at home, is the time to allow them to fail. Catch them. Help them to formulate a new plan to meet their goals, but don’t bail them out. If you decide to loan them money to pay for something you feel is important and urgent, then teach them the concept of interest on the loan. Explain that if you or a bank loans them money, that money is not available for you to use and you will have to make some sacrifices. This is why interest is charged.

Teach Them to Shop

When your child is ready to spend their money, go to the store with him and help him evaluate his purchases. Point out the sale racks. Introduce him to the concept of store coupons. Compare designer looks with less expensive clothing and teach him about bait and switch. Bait and switch is the practice of not having an item that is advertised available when you reach the store, then they tell you they will substitute another similar item but for a slightly higher cost, or they will offer you an inferior quality item.

When our daughters were in high school, we loved going to the consignment shops. It was a challenge to see who could find the cutest outfit at the best price. We also loved hitting the sale rack at bridal shops looking for prom dresses. Help your children to understand two very important things. First, there are always other stores to check out for better prices, and second, everything goes on sale eventually, so those who are patient can save money.

Take you children grocery shopping, especially the teens. They will be on their own soon and need to know how to spot the bargains in a grocery store. The jumbo size is not always the cheapest per serving, and store bands are canned by the same canneries as name brand items. When all is said and done about shopping, one principle is still true:

Involve Others

Let grandparents know what you are trying to teach, and let them help. I love it when my grandchildren come and want to earn money. I love having them wash my baseboards (a chore that seems to get harder on the back each year). Our grandchildren have banks at our home and we put money in them when they are here or when we hear about something unselfish they have done, or when they are extra good helpers at home. As we take day trips when they visit, the money in those piggy banks makes those outings even more fun for each of them.

Offer to “hire” a friend’s child if the friend will “hire” your child. Children often work harder for someone other than Mom and Dad, and the experience of seeing that other families also work hard can leave a lasting impression.

Save Receipts

Teach children to save receipts. Explain that receipts will help them to know exactly how much they are spending and where. They are also important in case the item is defective and it needs to be returned.

Reward Them

Praise your children for all their budgeting successes. Surprise them by adding to their spending fund or savings account. Your children need to know you are watching and are proud of their budgeting accomplishments.

If we fail to teach our children the skill of money management we are setting them up for financial dependency (relying on parents or government instead of themselves). We are setting them up for unnecessary stress in their future homes.

Of course, managing money is not about believing that happiness comes from having things. Happiness comes from being true to ourselves, to our families, and to the Lord. When we help children to understand that there is happiness in providing for ourselves through work and prudent budgeting, they prepare to succeed in a world that rewards consumption and excess. With the experience you give them, they will be equipped to recognize the snares that cast others into lifelong habits of spending excess and financial woe.