Teaching Kids About Debt with Howard Dayton

“Train up a child in the way he should go; even when he is old he will not depart from it.”- Proverbs 22:6

God’s Word tells us that children should be taught early how to live wisely and righteously, including how to handle money. Howard Dayton is here to explain why it’s especially important to teach kids about the dangers of debt.

Howard Dayton is the founder of Compass Financial Ministry and the former host of this program. He is also the author of a number of books on the topic of Christian Finance and Stewardship.  

The Little-Big Principle: Starting Small

The Little-Big principle is based on Luke 16:10: “He who is faithful in a very little thing is faithful also in much.” This principle encourages parents to start small when teaching children about money. The idea is to give kids small amounts to manage, like nickels and dimes, and then gradually increase the amount as they prove responsible. Eventually, they’ll be prepared to manage larger amounts of money.

Parents should aim to steadily increase their children’s financial responsibilities so that by the time they’re seniors in high school, they’re independently managing most of their finances, aside from essentials like food and shelter. They should also be as systematic in teaching children about money as schools teach them to read and write—starting with the basics and progressing over time.

When children reach their junior year in high school, they should open a checking account and get a secured credit card. This allows them to learn critical skills, like reconciling budgets and paying off balances in full each month. Developing these habits early on can set them on a path to financial freedom and help them avoid debt throughout their lives.

The MVP Parenting Method: Model, Verbalize, and Provide Practical Opportunities

The MVP method—modeling, verbal communication, and practical opportunities—is a very beneficial framework for teaching children about money. All three are essential for training children to be good stewards of God’s resources.

1. Modeling

Parents must lead by example. In 1 Corinthians 11:1, Paul said, “Follow my example, as I follow the example of Christ.” Children learn by watching their parents handle money wisely, so parents need to demonstrate sound financial stewardship. Whether budgeting, giving, or avoiding debt, children are more likely to adopt these habits when they see them modeled in everyday life.

2. Verbal Communication

The Bible instructs us to teach our children about God’s ways consistently. Deuteronomy 6:6-7 encourages parents to impress God’s commandments upon their children and talk about them regularly. Parents should frequently discuss biblical financial principles with their kids, helping them understand how these truths apply to their own lives.

3. Practical Opportunities

Giving children opportunities to apply what they’ve learned is essential. Hands-on experiences help children understand the impact of debt in a tangible way.

Resources for Financial Discipleship

For parents looking to dive deeper, Howard Dayton and Compass Financial Ministry offer a resource titled Financial Discipleship for Families: Intentionally Raising Faithful Children. This book provides more detailed guidance on teaching kids about finances from a biblical perspective and is available through Amazon or Compass Financial Ministry’s website.

Teaching kids about money doesn’t happen overnight. It’s a process that requires modeling good habits, consistent communication, and providing practical opportunities for them to learn. By applying the Little-Big principle and becoming MVP parents, you can equip your children with the financial wisdom they need to be faithful stewards of God’s resources for a lifetime.

For more tools and resources, visit Compass Financial Ministry at CompassFinancialMinistry.org. 

On Today’s Program, Rob Answers Listener Questions:

• I've had some health issues over the last seven months, and my kids would like me to move out to Washington State. I found a lovely condo that interests me, but it's a co-op. I didn't know much about co-ops, so I would like to know if you have any words of wisdom for me about what I should be aware of when considering a co-op property.
• For the past three years, I've been giving through the required minimum distribution (RMD) program. My church has been happy to receive these funds, but I'm still working. I was told you don't have to take the RMD if you're still working. Is that true?
• I have an IRA and retirement account to be divided equally between my three children. One of my children's spouses does not handle money well. Can I set up a trust for that child's portion to distribute according to my wishes when I pass away? My son, the executor, doesn't want to do this because he's concerned it could cause problems.
• I have an old revocable trust, over 40 years old, that no longer reflects my current situation. Is there any way I can get rid of this trust without going through many steps or spending a lot of money with an attorney?
• I'm 64 years old and considering end-of-life planning and documents. I want to ensure my affairs are in order and avoid probate when I'm gone. But the lawyers are quoting me $3,000 to $5,000 to get everything set up. Can I get this done more affordably without spending that much? I'm not great at paperwork, so I'm looking for an option that only requires a little DIY.

Resources Mentioned:

• Compass Financial Ministry
• Financial Discipleship for Families: Intentionally Raising Faithful Children by Brian C. Holtz
• Splitting Heirs: Giving Your Money and Things to Your Children Without Ruining Their Lives by Ron Blue
• Bankrate.com
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App

Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network and American Family Radio. Visit our website at FaithFi.com where you can join the FaithFi Community and give as we expand our outreach.