Money is extremely important in our society, so it’s important to get good foundations.
I’m sure most people would agree that the best place to start learning about money is from the parents. But sometimes well-meaning parents can cause some negative unintended effects.
Setting up the wrong habits can be a bad thing. If parents make their children believe that it’s not possible to do well financially then they’ll believe it, at least for most of their younger years.
CNBC recently released a piece about six classic parental mistakes about money:
Always saying yes
How much we love our kids does not equate to how much we spend on them. Saying no is an important part of learning patience, financial discipline and delayed gratification.
Kids should be taught that items cost money and we can’t (and shouldn’t) buy everything we want. This can be an opportunity to teach kids to build their savings in their Commonwealth Bank of Australia (ASX: CBA) (or any other bank) savings account to buy the desired item.
Buying things right away
Children need to learn the difference between a need and a want. One strategy to help delay buying things can be for kids to write down what they want on a list.
Sometimes kids may not actually want to buy those things in a few days time. It can help them learn how much they actually want to buy something or not. For those things they really want, they can save for it. But, Afterpay Touch Group Ltd’s (ASX: APT) model is based on buying sooner rather than later.
Not teaching the basics
Teaching kids what debt is, why it’s bad, what a credit card is and how compound interest works can help develop the right frame of mind around saving.
Credit sounds fun. You suddenly have the freedom to spend thousands of dollars. But it’s better to learn these lessons before someone gets into thousands of dollars of debt.
Excluding kids from big decisions
Deciding what car to buy or where to go on holiday is important for household budgets. You can find things on sale, you can compare prices, you can talk about how much money is realistically available for that choice.
Understanding that you need to make wise decisions based on your income is important for personal cashflow and building net worth.
When you unlock this type of conversation you can teach how some things, like food, may be similarly priced but you get much more enjoyment or much more food when you prepare food yourself or at least do a bit of comparing between the options.
Paying for everything
Every family has different ideas about what kids should pay for. As long as it’s done in a positive way it can create financial confidence for the (teenage) child if they pay for some things themselves from money they earn at a job.
It’s not so much the monetary value, but more about teaching responsibility and making their own money for what they want to spend and then working within that budget.
Treating money as a taboo
Money permeates all areas of our society but people don’t like talking about it. You don’t have to talk about everything with your friends or neighbours, but I think it’s healthy to talk with children, mostly teens, about the things that adults (should) do with money.
Budgeting, investing, tax and so on are all things it’s important to have at least a basic understanding.
We all want our kids to do well at life and money is one of those things that can have huge tangible and intangible effects over many years.
The post Parents should stop doing THESE 6 things to financially help kids appeared first on Motley Fool Australia.
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