There are many things that parents shouldn’t do when trying to instill good financial skills and values in their offspring. Lots of them are common sense – things like not spoiling your kids by giving them everything they want.
Here are some that either are not that apparent or not that easy to implement.
Giving them conflicting money messages.
Many couples never talk about their money history, expectations and attitudes before they have children. Your approach to things as mundane as whether or not to give an allowance or to provide monetary awards for certain accomplishments can cause conflict between you or confusion in your children.
Agree on the values and expectations you want your children to have in the area of personal finance and consistently teach and enforce those between the two of you (and clue in any significant others in your family such as aunts, uncles, grandparents and etc).
Derailing them with sudden windfalls.
The very worst time to load up your child with lots of money is in their late teen years. All of us are trying out things at that stage of life, testing our beliefs with new experiences and becoming our own person. Dumping a windfall on your child at that age can easily derail them from discovering their own way in life. If you think your child will inherit, earn or receive sudden money in their teen years, take measures to train them beforehand, or to legally withhold the money until they mature.
Instilling emotional laden feelings about money.
Messages about money can be filled with emotion. Money may mean power or control or misery or any number of other things to you. Money is a tool. Money is neutral. It is how you value it, use it, spend it, invest it or give it away that causes the emotion.
Throwing money at your child won’t make up for lack of your time and attention. Yelling at your child when they miss their budget isn’t instructive. Blaming your inadequacies on lack of money is an untruth.
Be careful to convey your money messages with neutrality.
Neglecting to give them practice with money.
Most parents let their kids have some kind of money – either via an allowance, a job or chores around the house or from gifts. Many parents neglect to require increasing levels of responsibility from their children in meeting their own needs using that money. Making choices and decisions of increasing complexity and consequence is important in the maturation process. As your child matures, turn over increasing larger amounts of money to them and make them responsible for providing their own clothing, school supplies, gifts and more.
Bailing them out.
A parent’s natural instinct is to help their child through his or her difficulties. Sometimes that is not the best course of action. Unfortunately, none of us come equipped with the knowledge, ability and experience we eventually need in life to deal with money issues.
Kids need to learn through experience that there are real consequences to mis-managing their funds, and it is much better to let them learn that while they are under your wing. It costs less, has lower impact and you can keep an eye on the situation and help them learn from their mistakes.
If your child’s funds run out before they meet all of their responsibilities for the period, don’t bail them out. If your college student runs up their credit card bill and can’t pay, make them work it out. If your kid puts the car you gave him down as collateral for a title loan, make him pay you back and take back the car if you save it from the loan company.
Readers, what other things should parents avoid when teaching their kids about money?