Most parents miss the opportunity to pass sound financial advice to their children and both suffer in the long run. Learn common parental mistakes and misconceptions about money below and make sure you are sending the right finance messages to your kids.
- Modeling bad financial behavior
Kids copy the things you do. You do not even have to say a word! When it comes to money, it is important to show them the right things to do. Take them to the bank when you are making transactions or show them how you settle your bills at the end of every month. Once you complete the action, explain the process step by step.
- Always letting your spouse pay
Most wives leave the bill for their husbands to settle when eating out. The kids see this all the time. In their minds, they interpret this as “It is someone else’s job to pay for me.” Help your children understand the importance of being responsible with your own bills and money. Explain the concepts to them in a way that they can digest.
- Not explaining how credit cards work
When the children watch you scratch your card, they think they can whatever they want, whenever they want by using this magic plastic. They have no idea how to budget or pay for it with real money. It is easy to overspend and accumulate debt when you do not see cash leaving your hands. Highlight the realities of a credit card with your children and teach them tips on how to use it responsibly.
- Not talking money in front of your kids
Parents are reluctant to discuss money with their kids, in some cases, they are even having a hard time talking about it with each other! What children take away from that is that there is something about money that is inherently bad, shameful, or embarrassing. Make talking about money a normal, daily occurence. You can share your grocery list with them or how to choose between generic and brand name products. The idea is to give them visibility into your thought process. It will help them create a good and realistic perspective about money.