Our Family’s Financial Philosophy: Give, Save, Spend

It’s always the same story:

Roenne (My 5 year old): Appa, can I get a new game (for the iPad or her iPod)?

Me: Well sweety… let’s see what’s in the App Store that’s new and free, shall we?

Roenne: Ok…

Except, this time, she wanted one that was most definitely not free.

Roenne: But Appa… I want a game that costs money.

Me: … … … hmmm… …

What’s neat is that we’ve been teaching our children a principle of financial planning since she was two years old, one that we first heard from our Pastor, Andy Stanley. We started with a $1 and divided it up into quarters, dimes, and nickels and showed her where to put them. Since then it’s been increased over time as she’s been visited by the Tooth Fairy and gotten money from grandparents for birthdays and such.

It’s called Give, Save, Spend and it’s very simple:

  1. Give - First, whenever you get a paycheck or some money, you set aside some of it to give back to our church and for those that need it more than we do.
  2. Save - Second, you put at least 60% of what’s left over into your savings (we call this bucket “Money for a rainy day!”).
  3. Spend - Lastly, you use what is left over for spending on what you need which may include fun things (like iPad apps).

Of course, for our much larger “more grown up” version we have figures, budgets, and plans that dive into each category but for our children the principles are just enough to get started. Give first, save second, and then spend last.

The lesson continued…

Me: Well, Roenne, do you have any money in your “Spend” cup?

Roenne: Hmm. Let me check..

She then goes off and grabs her three cups and brings them back. She counts $18 in her “Spend” cup and proudly smiles.

Roenne: I’ve got $18 dollars! I can spend some, right?

Me: Sure. This game is (gasp) $4.99 which is almost $5 dollars. Count me out $5 and I’ll get you that game.

Roenne proceeds to quickly count out the dollars – I’ve never seen her move so fast…! This was the first time she had actually spent some of her money explicitly on something that she had wanted. I knew this was a teaching moment!

I wrote out for her the simple math and she easily saw that things were being deducted from the Spend cup. She handed me the bills as well as the iPad.

I typed in the password and we waited for the new game to download. She was incredibly proud of herself but as she was about to go off and play it she asked this most interesting question:

Roenne: Appa… … how do I make more money because I used some today?

I smiled, gave her a great big hug and whispered:

Me: You do work that you love.

Roenne: Ok. I will.

  • http://Hansschiefelbein.com Hans

    John, thank you thank you thank you for sharing this. The value of teaching our children these principles is so valuable. Well done.

  • http://blog.bradkindercoaching.com Brad Kinder

    This is awesome! I have a teenage daughter and she has a job. It is great to see her make a decision NOT to buy something because she is weighing the opportunity cost. My son on the other hand, I’m still educating “the spender” in him.

  • http://www.networkgooder.com Lee Glass

    Fantastic life lesson! I love this. Thanks for sharing.

  • http://multiverso.com multiverso

    This is a great story John, and good advice for us and our kids. Thanks.

  • http://theannoyinglife.com Kevin Martin

    I think your financial philosophy is great.

  • http://www.angelab.me Angela

    One of your best posts ever :)

  • Kevin Gainey

    We’ve used this system as well over the past three years and it’s worked very well for the kids. They “get” that if they want something, they’ll have to save their money. As a fan of a alliteration, we use Sharing in place of Giving.

  • http://www.improvinglifedaily.com Ivan Chan

    A very cute story, John. Especially the last part: “do work that you love”.

    Love it! I will have to remember this for the future!

  • http://butcheringsaint.wordpress.com Nate Schubick

    Great post John. I cannot wait for those teachable moments on my kids’ to arrive. I had already planned on this one as well as others. Great job parenting

  • http://www.jmlalonde.com Joseph Lalonde

    John, you’re awesome! Teaching your kids these great lessons and showing them they can make money doing what they love. Can’t wait to see the amazing work they do because of your leading.

  • http://www.ontargetcoach.com Brent Pittman

    Ah a budding entrepreneur and proud dad.

  • http://www.kfdp.com Kellie

    Are you sure you’re not a United Methodist!!!??? Love that whole post!

  • http://eatingrichly.com Eric J

    That’s great! I assume that from the photo it was a $5 princess game?

  • http://PointContentWriting.blogspot.com Anna B

    This is so charming! I love your response to her at the end. I hope she grows up to see that the world is full of possibility and exploration.

    Great post!

  • http://jaredlatigo.com Jared Latigo

    Sounds like Dave Ramsey principles to me. I LOVE the idea that you’re teaching her so young, it’s highly important that kids understand financial matters such as work creates money and so forth. Be sure to check out daveramsey.com – His Financial Peace University course is incredible! All Biblical based too :D

    • http://www.about.me/benterry Ben Terry

      You are so right, Jared. I had very little understanding of how important finances matter, and I would agree that learning this at a young age would be very helpful. I guess it’s better late than never.

  • Adam

    This is a great idea. We will definitely be doing something like this when my son when he gets a couple of years older.

  • http://evanoxhorn.wordpress.com Ivanoakthorn

    A great story. I just hope that you don’t give away too much personally identifiable information in these posts. For example, do you have any password hints for your bank or website based around your daughter’s name?

    Real facts make for great reading, but they also expose you to dangerous folks. Stay safe and well!

    • http://john.do/ John

      good thoughts. :)

  • http://jorgesilvestrini.com Jorge Silvestrini

    I wish some adults will learn such a basic principle… Knowing where things go before we make the decision of using what we might not even have! Good job…