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Henny Elishevitz, Beis Moshiach

Last week we spoke about the question of whether children should be given money of their own. This week — under the assumption that there certainly are many good reasons to do so — we will talk about how to teach them to budget and use their funds wisely.

Although this may not seem as something directly related to chinuch, it very much is. In Klalei Hachinuch, the Rebbe divides education to stages. One of the first is education to cleanliness, hygiene and organization. These are not mitzvos per-se and also non-Jews find this important, but a prerequisite to proper Jewish and Chassidishe life is seder v’nikayon. “Ah Chassid iz ah mesudar,” and part of raising children to be Chassidm is to teach them how to maintain seder. “Derech Eretz kadma laTorah” is not prioritizing Derech Eretz to Torah; its setting the stage to allow for a child to properly study and live in the way of the Torah.

Teaching financial responsibly is an integral part of education for seder (though it begins at a later stage), and some core values that are indispensable parts of Yiddishkeit are imparted through it. They include respect for property (my own and my fellow persons); the ability to prioritize; telling needs from wants; the importance of sharing and giving tzedaka, and more.

I’d like to begin with the following quote from the Frierdiker Rebbe’s childhood memories in Likkutei Dibburim (Reshimas Hamaasar part IV, Chapter 15) that can teach the ideal level of fiscal responsibility we should strive to inculcate in our children:

“I had very much wanted to buy certain well-bound study books and also a gilt chain with a watch. According to my reckoning, the capital that I had amassed from the memorizing of Mishnayos amounted to quite a sum. That meant that the cash in hand and the debts owing to me would have sufficed for all my wants. In view of the difficult situation, however, I realized even then that my debts could not be counted as ready cash whenever needed, so I weighed and considered the question: Should I first buy the books, even though in the meantime I could manage by borrowing, or should I first buy the watch, which could not be borrowed?

“When the question had been duly weighed, the scales of my logic determined that the watch was more necessary, for it would be more useful towards disciplined timesaving. As I turned this question over in my mind and repeatedly pictured just how things would be, I became utterly convinced that when I had a watch not only would every single hour be solidly dedicated to the purposes of heaven, but even the individual minutes would be safeguarded — especially if I had a watch which indicated the minutes. Then, for sure, every minute would tell me exactly what should be done with it. In the morning, for example, the clock would wake me up at 8:00; a little later it would command me to drink tea; at 8:30 it would order me to go to my prayers; at 10:00 it would tell me to sit down to my studies; and so on.

“My heart filled with hope that acquiring the watch would upgrade my entire life. I would then be big — a boy with a watch, no less. I had already told my mother of my desire and she had agreed. All I now had to do was to gather in all my wealth which was out on loan to a number of people.”

This is perfect story to read to children when initiating a discussion on finances. Now for some tips on how to do this:

How do we educate children to responsible financial conduct?

We talk about it. We teach them sets of priorities and the manner to conduct themselves accordingly in order that the money will be sufficient for what’s truly important.

We develop habits for savings and refraining from fulfilling immediate satisfaction to achieve more long-term objectives. We explain proper financial concepts and principles. We enable them to practice using their newly acquired knowledge.

If we do not relate directly to money matters, we will eventually deal with the results of irresponsible economic behavior when they grow older.

Even with financial issues, it is most important to set clear limitations, stubbornly and unyielding, even if the child pleads and cries!

We show them a personal example of intelligent conduct, even if not necessarily perfect. We speak about financial difficulties, how we overcome them and improve our manner of dealing with such matters.

We do not share details on our financial situation – how much we earn and what is the balance of our account – in order not to frighten them… Above all, we do not have to give our agreement for every expense they wish to incur.

We do not allow any manipulations of the parents’ decisions. We formulate a single course of action in connection with requests for money, and we support our spouse’s decisions.

AN ECONOMIC DISCUSSION

We use daily occurrences, such as a trip to the store to open a discussion on the matter. A conflict between a growing child’s wants and the family’s needs or abilities is an opportunity to discuss the order of economic priorities, consideration and planning.

We share the objectives of savings and the family’s order of priorities. It would be appropriate to enlist the youngsters in the family’s saving efforts, and we should promise them that in exchange for said efforts, a portion of the money saved will go towards a desired purpose.

We teach them that money and purchases are not a measure of love, and we don’t buy love, acceptance, and satisfaction with them.

We help the youngsters in dealing with social pressures that clash with the family’s priorities and values.

THUS, WE LEARN:

Budget administration – We will explain the difference between things that we want and things that we need, the importance of financial planning, preparing a balanced and logical budget, and the importance of saving money from income or gifts. We will learn to build a budget and to use computer worksheets for budget administration. We will demonstrate this from the current family budget or we will plan together a budget for a family event.

Proper consumerism – We will accustom ourselves to comparing prices and considering substitutes. Let them guess how much a certain item costs and then show them the actual price. We will speak about advertisements and notices on sales. We will teach how to read bills and receipts, and we will make certain that the financial charges befit the transaction. We will encourage our youngsters to recognize their rights as consumers demanding to understand as well.

Becoming familiar with financial institutions and products – We will teach our youngsters (at the proper age) about the task of a bank, a bank account, and saving accounts. We will teach them to read a bank statement and even take them for a visit to the bank.

Educational game for proper consumerism – Give the youngster a list and a sum of money and ask him to compare prices and sales. If he manages to buy for a lesser amount than what you give him – he gets to keep the change! Another benefit: he won’t be concerned about dealing with money.

EVEN MATURe ADULTS HAVE DREAMS…

As children grow older, their economic desires grow larger and more expensive. The youngster’s savings will help achieve the objective of instilling greater significance to money matters, financial training, and exercising restraint, both in general and on monetary issues. Tell him/her how saving money helps you fulfill your dreams or deal with unexpected expenses.

ENCOURAGING SAVINGS

We will encourage setting goals. It is recommended to start with a relatively small goal and continue on to bigger and more expensive objectives, e.g., a trip to the Rebbe MH”M.

Make clear to your youngsters how much they have to save to fulfill their dream. Teach them how to arrange a market survey and determine how much they are capable of saving.

Think together how much time it will take to save the desired amount.

Outline for them how to keep hold of the money that has been saved. It is recommended to use a “petty cash box”, so that the money remains visible and real, but without the ability to waste it easily. (Such boxes are available at your average ‘dollar store’ – the tin can variety that when you open it, it can’t be used again…) As the children get older, it is recommended looking into depositing the money in a bank as a means of savings for which they will be responsible. It would be appropriate to encourage the youngsters to save their money, promising them that you will participate in covering their expenses after they have saved a respectable portion of the required amount.

Save together as a family for some joint endeavor. In this manner, we will teach our children to consider joint efforts, the needs and preferences of others, thereby giving us an opportunity to speak with them about money and daily financial choices.

POCKET MONEY AS AN EDUCATIONAL TOOL

Pocket money can serve as income for certain needs that the parents don’t provide. It can also teach proper financial planning, greater self-control, and achieving objectives. Check how much you usually spend on various products and services, which will now be the responsibility of your youngsters at home.

In accordance with the child’s age, agree upon an amount, taking into consideration the amount that you presently spend, specifying which items and services he is expected to buy with his pocket money: candy, games, designer clothes, recreational activities, gifts, mobile phone account, etc.

Give him the agreed upon amount at the appointed time. Don’t buy for him those items under his responsibility, and don’t lend him or borrow from him any funds!

Explain to him that he must save a certain amount of his pocket money for covering unexpected or relatively large expenses.

It is recommended to update the amount, the products, and the services for which he bears responsibility according to his age, his nature, and his changing needs.

It is recommended to make use of a pocket money agreement.

– Every Jew is wealthy also b’gashmiyus, says the Rebbe. “Rich and poor is in the mind” is a famous statement of Chazal, but we can understand this literally as well. Wealth can be easily lost when a person doesn’t use discretion on how to spend it. May we all be rich b’gashmiyus so that we won’t need to think hard before spending, but we should always think and spend in a conscious way.

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