Before technology, adults paid their bills by check, reconciled their finances in their checkbook ledger, and kept tight reins on where the money was spent. Now, kids and grandkids don’t even know what a checkbook is, let alone how to reconcile their finances through it. They are so used to checking their app and seeing what’s in the account each day that they fail to account for any expenses they may have spent that haven’t cleared yet. This can cause kids to be irresponsible with money.

Apps allow kids and grandkids to let a computer tell them how much is in their account. However, with the rise in fraudulent activity and hackers stealing money from people’s accounts, it is more important than ever that kids have a better understanding of what’s going on with their finances. Not only do they need to know what’s in their accounts, but they also need to know who has access to their money and whether they are spending more in certain areas than others.

Financial responsibility is a key life skill that parents and grandparents can greatly influence. One must-have is a formula that ensures they cannot spend more than a certain amount of their paycheck or allowance each week. A simple give, save, and spend method can make a significant difference in your children’s financial awareness. Here are some ways parents and grandparents can teach their kids financial responsibility using this model:

Give

The most important principle you can teach your child is that their money is not solely theirs, but God’s. Everything that they have in life was given to them by the Lord. The best way to maintain that perspective is to donate ten percent of their income to Christian charity. While it is ideal for them to give ten percent of their income to the local church, they can also give to organizations where they feel they can make a difference.

For example, if your child or grandchild is passionate about feeding the hungry, housing the homeless, or combating sex trafficking, many organizations accept donations to further their cause. By teaching them that the first thing they should do with their money is give it to something, not only do you teach them the principles of Jesus, where he gave his life for others, but you also help them contribute to the greater good of the world. This will give them a renewed sense of purpose and hope, as they feel they’re making a difference in the world.

Save

The second important step for their financial health is to save a portion of their income. Although it is easier said than done for some children and grandchildren, they must set aside part of their income for a rainy day. Ideally, they should save an additional 10% of their income in a separate account or in an envelope they don’t touch. Saving any amount of money is better than saving no money at all.

Saving money is not simply about helping them increase wealth. Instead, it is helping them understand that to reach any goal, it takes hard work. By saving and setting aside money, they may find they have far more than they thought at the end of a quarter or even at the end of the year.

Give them small goals to set. For example, pick something that they really want. Help them achieve that goal by saving small amounts of money each week. At the end of the month (or three months), reconcile the funds with them and confirm the balance. Watch their eyes light up as they see how much money they’ve saved simply by putting it away.

This helps not only teach them that money does not merely come to them, but that they must earn it. Additionally, it teaches them that, given economic volatility, money will not always be available. They (or their parents) may lose their jobs and be required to contribute to the household’s basic expenses.

Kids need to understand that being a part of a family is a privilege, not a right.  This also reinforces their belief that money doesn’t simply grow on trees; they must earn it. It will not always be there, and they must be good stewards of what God has given them. Sometimes they may need to contribute to basic household duties to ensure the family can survive. When they put money away, they can help in times like that.

Spend

Once your grandkids or kids have saved their money, it’s time for the fun part—spending it! This is perhaps the most important concept, since it is so easy to spend money frivolously. They must keep track of where they spend their money. At the end of each month, review with them how they spend their money. Have them record it on their phone or take photos of where they spent it.

They can also save the receipts, put them in a drawer or other container, and review them at the end of the month to identify where they spend most of their money. Do they spend most of their money on snacks and soda at the convenience store? Did they spend money with their friends at the movies? Did they purchase clothing or other essential items with it?

They must know exactly where their money is going each month. This is a valuable skill for kids to learn at a young age, so that when they become adults, they can analyze where their money goes. As adults, we often need to trim our budgets to make ends meet. If they’re spending a lot of money at the local convenience store on convenience snacks, it may be time to reassess the budget.

By using the formula above, you’re teaching your kids that giving is the most important thing to do with money, then saving it for a rainy day, and then spending it in moderation. By teaching kids moderation rather than excess, you’ve taught them an important life lesson they will carry into adulthood. Financial responsibility is one way you, as a parent or grandparent, can help raise healthy, well-adjusted, independent adults.  

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