7 Mistakes to Avoid When Teaching Your Child About Money

Anton Simunovic

Want to help your child become a real money whiz? Make sure to avoid these common pitfalls:

1. Telling little white lies when your child ask for money

I’ve read somewhere that the average child makes more than 100 requests of a parent a day! We parents want that whining to stop, so we’ll often deflect yet another purchase request by saying, “I don’t have enough money on me” or “We can’t afford that.” If you’re lucky, you may get some temporary relief. But these little white lies don’t help in the long run. Direct, honest dialogue will get you better results. Try “I can afford that, but we’re not going to buy it. It’s not a good value at that price.” Explaining why you’re not making the purchase gets kids thinking about prioritizing their wants, and teaches them to be more aware shoppers in general.

2. Keeping quiet about money

As a society, we’ve come to understand that staying silent on the topics of sex and drugs often leads to negative outcomes. The same is true for money. Starting the money dialogue early, and having it often in an age-appropriate way, helps prepare our children for managing their own money wisely. Stay silent about it and you risk leaving your children open to the pitches of corporate marketers or pressure from spendthrift peers!

3. Giving bailouts

One of the fundamental lessons of managing money well is to appreciate that it’s limited. Our imaginations are always going to be bigger than our pocketbooks  no matter who we are. So it’s important that we learn to budget  to live within our means. Getting good at budgeting takes practice, especially as children get older and budget requirements increase. When your kids stumble (as they most certainly will) and blow their budget, do not bail them out. If you do, you run the risk of creating a recurring pattern, and your child fails to learn that overspending has consequences.

4. Always looking over your child’s shoulder

Being a parent isn’t easy. We want the best for our kids. Watching them make mistakes takes a great deal of parental self-control. But money “mistakes” learned early, when amounts and consequences are small, are essential for mastering financial skills. Our kids are learning machines. They process and remember everything. So when your child wants to “waste” his or her own money on that silly trinket, let them. It will pay dividends later in life.

5. Dismissing ‘dream’ purchases outright

One of the hardest things for kids to do is delay gratification. They are wired to want everything now! So when your child comes to you and wants to buy an electric guitar, encourage it, even if you’re not a rock music fan. Kids who learn to work diligently toward dreams demonstrate a level of maturity, resolve, and moxie that will serve them well in life. Ask your children how they are progressing. Encourage them to think creatively about how they can reach their goal faster. And be sure to celebrate with gusto when they get there.

6. Failing to get on the same financial page with your spouse

Our children are wonderful, manipulative little people. When they sniff disagreement between mom and dad, they’ll drive a truck into that wedge if it will benefit them. We can’t blame them, really. Growing up isn’t the easiest thing in the world and kids want to know what their limits are. So when it comes to money, it’s vital for parents to be on the same page. How much allowance to pay? Will it be tied to chores or not? Can the kids buy whatever they want with their money? What about when a windfall comes from Grandma?

7. Waiting to long to start the money talk

Many adults find the topic of money stressful, so they mistakenly believe they are doing their children a favor by shielding them from money talk. The truth is young children have absolutely no preconceived notions of money. They’ll look at money exactly for what it is: a medium of exchange used between two parties. Kids who learn to get comfortable and respect money early are much more likely to be able to use money to achieve their dreams in life. So instead of shielding your children from money, expose them to it in positive ways, and money won’t be a stress in their lives.

Source: Parents