Now the fun part. We have established our family budget, and helped our children to establish their budget. Now be certain about what you have decided, because once you see what is about to happen you might feel the need to change what you have already decided. But remember, please, that this is NOT ABOUT HOW MUCH MONEY THEY GET, IT IS ABOUT TEACHING THEM RESPONSIBILITY OF MONEY. TEACHING THEM TO BE GODLY WITH THEIR MONEY!

We are going to break down their allowance. Get ready, hold on, and be prepared, because this is a little out there, but it is the truth!

Here’s how it will work. You have decided on the payday. You are going to lay out their money (will be in coins and bills). You will tell them here’s your allowance. 

Tithing 20%

I’m going to use 20%. You can change this %, but the way I am teaching my children is to immediately put 20% aside to give back to God. That can be to the church, towards a mission trip, or charity. You can separate it into however you want, but 20% gives you plenty to play with. This is tithing towards the church and also covers any charitable organizations they want to contribute for, or shopping and getting food/clothing for the local food bank/homeless shelter.

Taxes: 20% 

Mark 12:17 ~ ‘Then Jesus said, “Give back to Caesar what is Caesar’s and to God what is God’s”.
We need to prepare our children for taxation that will happen when they start to work in the real world and get that first pay check. They need to understand that it is taxation is a Biblical principal. Yet just like the taxes we pay the government gives us back our money through roads, education, and so forth. We are going to use this tax money to help us be able to match or contribute to what we discussed on day 3! You will need to be very diligent and not use this money for anything other than what you have said you will use it for. Split the tax money up or keep it together, but this money will go towards their future finances, helping to eliminate your future financial children stress.

Living Expense: 20%

Again I know you are thinking I’m crazy charging my kids a living expense. But remember the goal is for the children to learn to live within their means. They are going to know if this is how much I get paid from my paycheck this is how much money I can use for my rent, gas, food, electric, ect. This money will be separated into their envelopes that they have set up. Yes, even little children should have an envelopes for living expenses. Their clothing, their food, ect.

*I also encourage you to tell any child that is working and receiving a paycheck that as long as they are living in your home you require them to use that paycheck the same way that you have been teaching them. That you see them do this. I encourage you to make them pay at least one of their bills in full or partial. So if they have a car, they should be paying insurance (all or partial). Maybe chip in for the electric or grocery bill. You can always put this money aside and return it to them at a later date. But having them pay a bill shows them responsibility other than their breakdown of living expense bills. You can also put whatever is left over after paying the bill you have decided they are responsible for into an envelope to give back to them at a later date. Use this money towards their wedding, down payment for a house, deposit when they first move out, ect.

10% Emergency Savings
10% Savings 

This will leave them with 20% for their immediate gratification or for them to use the way they want to.

I know it seems insane. But did you know that according to a Cambridge study done on children and finances that children have established their treatment of money! Yes, they are already learning their own spending habits by SEVEN YEARS OLD! Now that’s scary!! Do you see even though it seems crazy and a little absurd; in the long end you are giving your children lifelong financial freedom! No matter how much money they earn they will never feel financial stress or debt. That’s what God wants for all of us!! 

Breakdown again:
20% Tithing
20% Taxes
20% Living Expenses
10% Emergency Savings
10% Savings
20% immediate gratification

So if their allowance is $10/allowance day that’s:
$2 tithing,
$2 Taxes, 
$2 Living Expenses, 
$1 Emergency Savings, 
$1 Savings, 
$2 immediate gratification

If you have decided to do $1/allowance day that’s:
20 cents tithing
20 cents taxes
20 cents living expenses
10 cents emergency savings
10 cents savings
20 cents immediate gratification

Created for the Gift of the Home Group by Jennifer Cangiamila

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