Do You Make These 7 Money Mistakes With Your Kids?
Here are the seven biggest mistakes parents make that teach kids poor money habits:
Mistake #1: Buying your kids everything they want.
Your heart is in the right place. You want to make them happy but this is the wrong way to go about it.
If you buy them everything they want, first of all, they are not going to appreciate what they have. Second, they won’t learn how to work and save for the things they want.
Worse you may be training them to rely on you for money… forever. Is that what you want when they are 30?
Mistake #2: Not letting your kids make mistakes with their money.
It’s hard not to stop them from buy something that you know is a waste of money.
But that’s how they learn. Give them your advice but let them decide. That regret they’ll have afterwards is a great teacher.
It’s better that they experience it when they’re young, the purchase is small, and it really doesn’t matter in the scheme of things.
Mistake #3: Not teaching them how to save.
Developing a HABIT of saving every time they get money will serve them for a lifetime.
Check out my post on this topic.
At younger ages the total amount that they are saving is not the important part. Creating the habit is.
So if they get $20 from their aunt for their birthday and they choose put $2 or $4 in their savings account that’s a win! If they develop a lifelong habit of doing this then the amounts will get larger as they get older.
Mistake #4: Not discussing money enough.
Discuss the basics of the family budget. Sometimes parents feel like it should be kept private. If you feel that way then you don’t have to show them every detail. But it’s important that kids learn how a home budget works.
Explain how you get paid for your job, you deposit your paycheck into your bank account, pay your bills and save a certain amount each month.
Let them watch you as you write out the checks or go online and make the payments.
Take them with you to the grocery store and talk about how much individual items cost. Let them see the receipt so they get an idea of how much it costs for all the food your family eats.
Mistake #5: Setting a poor example.
Two words: Impulse buying.
This is when you purchase something on a whim that you don’t need and weren’t planning to buy.
Say, for example, you are out shopping with them for a specific item. You see something that catches your eye and its on sale. So you decide to treat yourself.
Their take away is that it’s OK to spend without planning first.
Impulse buying is a bad habit that often contributes to people spending more than they can afford.
It’s best if you can show how you first think about the family budget before making a purchase. You can tell to them that you want something but you’re going to go home and think about it first.
Take the “impulse” out of buying.
Mistake #6: Arguing about money in front of them.
If they see their parents constantly having loud arguments about money they may decide that money causes problems in marriages. So they’ll expect this when they grow up. This can cause some to develop negative associations with money that they carry with them later into adulthood.
Instead show that you can have a disagreement about money in a conversational and constructive manner.
Also, some things may be better discussed away from them where they can’t hear.
Mistake #7: Not explaining the difference between Needs and Wants.
It’s important to be able to differentiate between the two.
Check out my post on this topic.
“Needs” such as food, a toothbrush, a warm coat, a place to live are important to be able to separate from all the other stuff.
“Wants” are all the other things that one would like to have but could live without. For example, the newest phone, designer pants, new skate board, and so on.
Understanding your needs vs your wants is important when planning and budgeting. Life is about making choices and you have to be able to prioritize.
Lacking the ability to prioritize is how people make poor spending decisions. For example, splurging on the fancy new jacket only to later discover that you don’t have money to cover the rent payment.
Do any of these resonate with you?