Stewardship, Your Kids, and The Three Little Pigs
Teaching kids about money
by Beau Henderson, Financial Advisor and CEO of RichLife Advisors
Parables and stories are great way to teach basic money principles to kids and adults alike. Today, we’re going to address basic money questions you might have as a parent such as:
- Should allowance be something children are given, or should it be earned?
- What do I do about the child who spends everything all at once? And what about the kid who won’t spend anything at all?
- How can I tell if and when my child is ready for a new responsibility?
Regardless of where you are at with your personal finances, you can begin teaching your children good money habits by applying the one, simple practice of wise stewardship.
Stewardship is a big word that sounds a little outdated, but the concept is both timeless and wise. As a financial advisor, it forms the foundation for what I pass on to my financial planning clients, my coaching clients, and my family.
Its root word is keeper,
meaning one who cares for and manages people and things.
Do you remember the story of The Three Little Pigs? It tells the tale of 3 brothers who were sent off into the world. Imagine that their parents gave them each an equal share of money, and told them to invest wisely!
1. The first little pig had a grand time and spent all his money on video games and candy. Because he had nothing left to build his house with, he used the left-over straw that blew across the road.
2. The second little pig managed to control himself a little better and had money left to buy some wood for his house. But things cost much more than he realized, and in the end all he could afford was a big pile of sticks.
3. The third little pig realized that a house was a pretty important investment. He used almost all the money he had to invest in bricks and mortar and built his house accordingly.
Along came the big bad wolf, who dearly loved to eat little pigs. When he saw the flimsy house built of straw, he smiled and said, “Let me in, Let me in, or I’ll huff and I’ll puff and I’ll blow your house down!”
“Not by the hair of my chinny chin chin!” replied the first pig.
And as the story goes, the wolf huffed and he puffed and he blew the house down. The first little pig shrieked and ran next door to his brother’s.
Now the wolf followed and the same thing happened again. The house of sticks was little better than the straw, and the same thing happened again, only now we have two little pigs running for their lives.
Terrified of the wolf, they go to their brother’s small house of bricks. He invited them inside where it was warm and cozy. No sooner had he shut the door then the Big Bad Wolf came knocking.
“Let me in, let me in! Or I’ll huff and I’ll puff and I’ll blow your house down!”
And this time, the third little pig was able to reply, “Not by the hair of my chinny chin chin,” with absolute certainty, because he had built his house the hard way. Sure enough, that old wolf huffed, and he puffed, and he blew and he blew. But that house of bricks did not fall down.
When planning for the financial future of your family, you want to rely on timeless principles based in certainty, not luck.
The principle of WISE STEWARDSHIP dictates that the better we take care of something – money, relationships, bicycles, toys – the better chance we have of getting more of that thing or something better. Teach your children to be “the keeper” of their money. Teach them to do the “hard” thing first and invest wisely like the third little pig. Apply the following 3 tips to help build the foundation of wise stewardship in your family.
1. Teach kids to take care of what they already have if they want something more.
- When I want to know whether or not one of my employees can handle a big client, I take a look at how he takes care of his small clients.
- Start out with small things and see how that goes before challenging them with bigger things.
- Teach your child: “If you want to earn the right to have a car, show me how you take care of your bike. If you want the responsibility of a dog, show me how you take care of your goldfish.”
2. Do not give allowance like it’s an entitlement.
- Harder tasks are worth more money. Easier tasks are worth less.
- Consider age-appropriate chores when assigning monetary value.
- Giving children money they don’t first have to earn sends the wrong message. It teaches them that financing a lifestyle is normal, when in truth it leads to debt, stress, and the wolf at your door.
- Doing the hard work of building something you want for yourself leads to self-reliance, responsibility, and a feeling of well-being.
3. Teach your kids how to SPEND, SAVE, and SHARE.
- Help them decide on a formula such as 70%, 20%, 10%.
- This will allow them to set aside an amount for spending on short-term items such as movies or treats.
- Long term goals such as big ticket items.
- And an amount that teaches the power of giving first. This might go towards a community cause such as a food shelter, a charity, tithe at church, or youth group.
- You can have some fun here designing your own special piggy-bank, divided into 3 sections. Or maybe you will have three separate banks to remind you of the parable of the 3 little pigs!
Teaching your child how to care for what they have by doing the hard work now will provide a sound foundation for financial success in the future. What a lasting gift that is for our kids!
What are your family’s money challenges? How does stewardship play a role in your life? Drop me a line with your money questions or stories – I’d love to hear from you!
I love your clever connection between the 3 Little Pigs and money management! What a great way to explain the often abstract concepts of money management.
I think the two most important things in raising a financially literate child are the involvement of the parents and the ability of the child to make decisions with the money. Handing a child or teen the money (whether through allowance or jobs) without any discussion or modeling from the parent is a lost opportunity for financial education. Money can not be a taboo topic. It needs to be an integral part of life so that kids learn to view money as a tool or resource, not as an ultimate goal.
Kids and teens also need to be able to make decisions with their money. They need to practice money management just as they practiced riding a bike. Mistakes will inevitably happen but I think it is better for them to make mistakes while they are young and the consequences are minor. Parents can set rules and guidelines but kids need to have the ability to make choices within those parameters. Kids and teens become much more thoughtful when spending their own money than they do when spending Mom's money!