The way finances work in our family is that my husband earns the money, and I try to spend as little of it as possible.

This is not because of any restrictions Doug puts on me—he is generous to a fault—but because my parents taught me long ago that “a penny saved is a penny earned.” In fact, thanks to taxes, a dollar saved is equivalent to two dollars earned.

One of the most important things parents can do for their children is to teach them the value of money and how to handle it wisely. To this end, we have established the following practices in our family:

• When our children turn 12, they become responsible for buying all their own clothes and paying for their own entertainment.
• While we do not give our kids any allowance, we do provide opportunities for them to earn money (see Chores).
• Although our older kids sometimes carry a little cash, most of the children’s spending money is kept strictly on paper. This cuts down on dollar bills showing up in the washing machine or coins getting lost under beds (they are choking hazards for babies, you know).
• We have designed a simple system for keeping track of the children’s spending accounts. A chart is kept in Mom’s notebook for easy reference. Whatever money a child earns is recorded at the top of his column, and whatever he spends is recorded at the bottom. The amount of cash in each child’s spending account at the start of the week (before any deposits or deductions) is written in the brackets in the middle of the column (see Children’s Spending Accounts).

• Each child has a college savings account. Whatever money they earn, 40% of it gets deposited directly into savings, to remain untouched until they begin college. Another 10% goes to the church, leaving 50% available for them to spend as they wish. This has proven to be a relatively painless way to save for their educations, little by little. It also prepares them for the fact that their income will be taxed someday as an adult, possibly even at that same 40% rate. They are learning early that “take home pay” is considerably less than “wages earned”.

• We “settle accounts” with Dad once a week by adding up each child’s earnings and dividing it between cash, college, and tithe. Any withdrawals the child has made are then totaled and deducted from his spending cash. Rather than running to the bank every few days to put a dollar or two into various savings accounts, these amounts are allowed to accumulate on paper for a couple of months before Dad actually deposits the money in the bank (see Children’s Savings Accounts).
• When a child wants to buy something, he first checks the chart in Mom’s notebook to make certain he has enough money in his spending account to cover the purchase. If so, Mom either gives him the cash or pays for the item with a credit card, then records the amount spent (plus tax) in the debit part of his column.
• This method of record keeping has been great for the children’s math skills. They can quickly calculate all sorts of percentages in their heads, including 8.25% sales tax, and can tell at a glance how much more money they need to earn in order to purchase a more expensive item. This encourages saving and teaches delayed gratification, as well.