Every parent wishes their kids develop good money habits and become financially independent when they grow up. But unfortunately, sometimes children grow up with a set of bad money habits and with little or no knowledge about managing money. This usually happens not because parents fail to teach their kids good money habits, but because they set some wrong money examples for them. No matter what you teach your little ones, remember they’re more likely to adopt your habits instead.
1. Borrowing money from parents
When parents lack money, they sometimes turn to their parents. There’s nothing wrong in borrowing some cash from your parents. But if you and your partner do it regularly, your children might think that this is the quickest and easiest way to get money. This can translate into poor budget management and constant money begging in the future.
Find an extra source of income by selling the things you don’t use anymore or finding a second job. As a parent, you should show your children that work is rewarding. This way, they’ll know that they should rely on themselves only and work hard to ensure a prosperous financial future.
2. Having no savings account or emergency fund
With credit cards being everywhere, many parents believe there’s no reason to save because they can use credit cards instead. Does this sound familiar?
You can’t teach your little ones to save money if you don’t do it yourself. When your family is on a very tight budget, it doesn’t mean you’re not able to save. You might not be ready to open a savings account right away, but you should at least create an emergency fund at home. Place that mason jar in the hallway and put money into it regularly. Give some coins to your children so that they can contribute to it as well.
3. Living beyond your means
Living beyond means has become the norm these days. Parents spend their paychecks in a week and end up using credit cards or borrowing money from their parents, friends, and colleagues until the next paycheck arrives. If you live beyond your means, your children start believing that such a lifestyle is acceptable. Moreover, there’s a likelihood they will live this way as well. Do you want your children to live debt-filled lives in the future? Set a good money example for them by learning how to live within your means.
4. Impulse Buying
Are you constantly running into debts just to buy a new version of iPhone or a better TV/dishwasher/washing machine etc. even though you don’t really need it? Do you often purchase something you never had plans to buy or your family budget can’t afford?
The buy-now-pay-later approach is effective, but only if you don’t get into a debt. Otherwise, you are setting one of the worst money examples for your children. Be patient and teach your children to save money for a certain thing, and plan before buying. Even if it takes months to get the needed amount, you have to do it. Patience is one of the keys to a debt-free life.
5. Having no monthly budget
Budgeting is crucial. It indicates the way your family spends money and helps you determine how much you can save each month. Budgeting ensures that your family will always have enough money for the essentials, entertainment, and an emergency fund. If you don’t keep your finances on track, chances are you have no idea where your paycheck goes. This results into a debt-packed life and constant financial issues. Parents who do not budget and are constantly in debt can’t teach their kids good money lessons.
6. Focusing too much on material things
We all live in a material world where money is an essential part of happiness. Parents buy expensive toys, clothes, phones, and other gadgets, trying to give their kids the best. Plus, they compare themselves to their wealthier friends or neighbors and aspire to get what they own. If you are guilty of being obsessed with material things, your children will grow up believing that owning stuff is a priority.
Gratitude is what matters most. Cultivate an attitude of gratitude on a daily basis. Show your little ones that you’re thankful for what you have. Give them your love, not the material stuff.
7. Fighting over money
Statistics state that financial concerns is often the most common reason for disagreement, fight, and even divorce for couples. Unfortunately, children witness their parents’ fights. Depending on how frequently they happen and what the reasons are, your fights, including those about money, can negatively affect your children’s lives. Kids who grow up in high-conflict homes have poorer health behaviors, financial instability, weak will-power, and wrong beliefs.
8. Using credit cards to buy daily essentials
Credit card debts are growing at the fastest rate. As the cost of living is rising, parents experience tons of financial obstacles. Credit card seems to help solve most of them, but the payback is too high. The monthly interest and fees can drain your family budget and leave you broke. If you end up using your credit cards to buy daily essentials like groceries or/and pay utility bills, it’s a warning sign you are on the wrong financial track.
Not only do you set a bad example for your kids, but you also keep running in a debt circle. When your children grow up, they will have trouble covering their necessary living expenses without relying on credit cards. Plus, they will get used to the buy-now-pay-later approach, spending money they never earn.
9. Being financially illiterate
How often do you educate yourself on financial topics? Do you know basic financial concepts like your net worth, investment, interest, and compound interest? When you are financially illiterate, you are more likely to develop bad money habits. Not to mention that you can’t teach your little ones basic financial concepts. It is important to discuss these with your children from time to time. It is also essential to keep yourself up-to-date with current financial and economic affairs and how it impacts your life.
Being a parent is hard yet one of the most rewarding jobs. You play a vital role in cultivating essential life skills in your children. If you set wrong money examples for them, you seriously hamper their chances of growing into money-wise adults. Think about it the next time you swipe your credit card or argue over money.