Much of what I try to teach my children about managing their personal finances has to do with making and keeping money. The other important lesson I want to teach them is how to give that hard-earned money away. While this seems easy on the surface, it’s a complex and nuanced area of financial education.
Entire books have been written about the “true value” of money. Money can provide stability; it can enable us to explore passions without needing for those passions to be financially rewarding. Having money allows us to enjoy experiences like wonderful family vacations or travels to exotic places. And, money can be shared to help further charitable causes.
I believe that charity begins at home. My personal feeling is that I am the most efficient mechanism for donating my money, so it is my personal responsibility to figure out the best way to be effective. That means it’s up to me to figure out what causes I am passionate about, and then determining the right charities, foundations, and other organizations to get involved with in my community. And involvement means more than charitable giving—it means giving my time or other resources available to me.
You might have slightly different beliefs when it comes to charity, however, and it is not my intent to philosophically show anyone the “right” way to be charitable. The concept of charity exists in all kinds of religious and philosophical traditions. As Parents.com explains, most people agree that giving back is important, but you will have your own thoughts, shaped by your own beliefs and upbringing. My mission here is to help you figure out how to impart your philanthropic financial values to your child.
When to Start—and How Much?
Most experts recommend creating some kind of charitable program for encouraging children when you begin to give him/her an allowance. You can build this into the budget you have for him (should you choose to budget). The most commonly recommended amount was 10 percent of their total allowance. This number has its foundations in Western religious tradition, being a common tithing percentage. The final amount is up to you, obviously, depending on your values and what you want to teach your child. The equal-thirds system many use is easy for children to understand, especially if you give them their coins or dollars in sets of three.
If giving is not budgeted into your child’s allowance or if you do not mandate they budget at all, then you can simply encourage them to make charitable contributions. First National Bank of Dad by David Owen makes the case that mandating charitable giving defeats the purpose of charity. If you force your child to give away some of their allowance, then you are simply padding their allowance with cash to be dispensed rather than motivating them to want to be charitable. He recommends that the most you should do is to set a good example. The more that giving is something they are attracted to do rather than forced to do, the more likely the child is to become a habitual giver or a passionate part of a charitable cause. Fellow blogger Beth Kanter stresses this idea in her article on teaching your children about philanthropy.
An alternative approach is to actively teach your child how giving works using their own money as a tool. You do not want to enact a charity “tax” by taking your child’s money without their choice, but I do believe that children benefit from active teaching and guidance. Potty training, for example, is not only done through modeling—there is a lot of active discussion and coaching. The right choice may lie in the middle. Each family and each child is different; it all comes down to picking the right system for you and your values.