There’s nothing I would love better than to sit down and tell my three boys all the right things do about money.
Unfortunately, just as is the case with every other lesson we provide, kids learn more from what we do than what we say.
My boys are no exception to this.
If our words say one thing, but our behavior goes in the opposite direction, the kids will come away with our behavior but not our words.
So how you behave with money will be the most important financial lesson that you can teach your kids.
Along that line, there are some financial behaviors you don’t want your kids to learn from you.
1. You Operate Without a Budget
If you spend without a budget – meaning that you buy what you want/need without regard for the cost – your kids will pick up on that. They’ll automatically disassociate buying from cost.
In that way, your absence of a budget will become their legacy. They won’t have a budget either and will reap the negative consequences that come from a lack of spending discipline.
2. Debt Is Your Friend
One of the biggest financial problems many households have is almost a silent one. It isn’t debt itself, but rather the quiet acceptance of it as some sort of “friend” in your life. If you come to see debt in that way, your kids will too.
But debt represents a reduction in future income, because you are paying for yesterday’s expenses today, and today’s expenses tomorrow. It’s a complex game of kicking the can, and hopefully kicking it far enough down the road that it doesn’t hurt you in any way today.
This is not a healthy view of debt. You can and should talk to your kids about debt, but how you handle it yourself is much more important.
3. If Our Friends Have It, We Need It
If you are taking your spending cues from your friends, you’re subtly teaching your kids to let their spending choices be determined by other people.
And if other people are indirectly in control of your spending, then it means that you aren’t. That’s a lesson your kids don’t need to learn.
4. Credit Cards Are a Way of Life
Do your kids see spending money primarily using credit cards? It may be good to increase your spending using cash.
This will give your kids an opportunity to see that spending money costs actual money and isn’t accomplished solely with the use of a magical card that seems to provide all that’s ever needed. It’s a visual lesson, but a powerful one that works better for kids.
There’s another possibility from the constant use of credit cards. It’s easier to deny that you have a debt problem when you’re using credit, also because actual cash doesn’t leave your wallet or your bank account. Kids can get caught up in that denial as well.
If you have a debt problem I suggest you focus on getting out of debt. You can jump-start this process by getting one of the best credit cards for balance transfers and moving all your high-interest credit card debt to 0% interest.
This way your debt leaves much faster without the interest working against you.
5. You Deserve the Best Things in Life
Do you often buy things because you think “I deserve it”? It’s OK to treat yourself every now and again, but the more important criterion is “Can I REALLY afford it?”
If your kids see you constantly buying things because you feel you deserve them, they may develop an entitlement mentality. That can see them buying things they cannot afford very early in life, and it won’t get better as they get older.
6. Never Talking About Money
This is another form of denial. It may be that you don’t talk about money because it is a contentious issue in your marriage. That’s never a good sign in itself!
But if you never talk about money around your kids, they probably won’t develop a constructive idea of what things cost, or that it even matters.
There’s enough of that happening on TV and you need to specifically avoid reinforcing that message.
Not only should kids hear you talk about money, but kids should also have financial responsibilities that are appropriate to their age. Tying an allowance to chores around the home, or having them donate some of their allowance to a charity are excellent lessons for kids to learn.
It’s all about earning and giving, two activities that will only become more important as they grow older.
7. “Eat, Drink, and Be Merry, for Tomorrow We Die!”
People often use this as a justification to live the good life, and in a way that’s toxic to their finances. It’s actually a Bible verse — 1 Corinthians 15:32 – that’s often misinterpreted to suggest that you should spend like there’s no tomorrow.
What if you eat, drink, and be merry (and go deep into debt to do so) and you don’t die tomorrow?
If you apply the misinterpretation of this verse to your finances, what you’re really saying – and demonstrating to your kids – is that we live to the fullest now because we may not be here tomorrow.
From a financial standpoint, passing that notion onto your kids is a complete disaster. It tells them that there is no point in preparing for the future, which is about the worst financial lesson possible.
8. Not Setting Savings or Investing Goals
You should have savings and investing goals and your children should be at least loosely aware that those goals exist and what they’re for. Goals are an opportunity to show children that some objectives require preparation and work.
It’s also a way of demonstrating delayed gratification – you are doing without now in order to achieve or accomplish something really important later. That’s definitely a lesson your kids need to learn.
In certain situations, it may not even be extreme to have your children contribute toward the goal in some way. It may be by adding just a few nickels and dimes into a family pot, or even by participation in some sort of activity. That contribution will validate the goal for your kids.
9. Always Take Advantage of a Sale
This is one of the biggest money myths in existence. While it is possible to save money making a major purchase when it is on sale, if serial sales are being used to justify serial spending sprees, then all you’re doing is wasting money.
It’s one of the oldest marketing tricks in the book – run sales to get people to buy what they wouldn’t buy otherwise. Avoiding the hook demonstrates a healthy amount of self-restraint. And that’s always a good lesson to teach your kids, particularly when it comes to money.
10. Keeping Financial Secrets
Have you ever bought something, and then told your children not to tell your spouse? That’s not a harmless request.
There are two negative outcomes that are likely to result:
- The kids will sense that there’s a problem, and/or
- You’ll be giving them a green light to think that it’s OK to lie about money – even if you’ve otherwise taught them not to lie in general.
Can that have a happy ending?
11. Pretending That Financial Habits Don’t Affect Health
If you are living on the financial edge, it’s probably affecting your health to one degree or another. Enough financial stress, like being deep in debt can even shorten your life.
If not for your own sake, for your children’s sake, get control of your finances and especially of your debt situation.
Your health may depend on it, and you should also have a goal of making sure that your kids don’t experience the same life-shortening fate.
Though you may think that your financial habits go unnoticed by your kids, rest assured that they don’t. No matter how much you lecture your kids about good financial practices, it’s your own financial behavior that will have the greatest impact on their adult lives.
You have an opportunity to make that the most positive experience possible right now. Take advantage of it for all that it’s worth!
We were getting our car repaired today and my sweet little 6 year old took an umbrella and smacked a brand new car in the parking lot that costs nearly one year of my salary. I freaked out and grabbed the umbrella and told her how expensive the car costs and she turned to me and said, “dad don’t worry about it, just write a check and buy it.” We talk about money but have some work to do. Love talking money and life with my daughter, she will be so far ahead of me since I pretty much had to figure it out on my own.
One that jumps out at me is never talking about money. This one isn’t so obvious to most people, yet it is SO critical to financial success. I believe talking about and teaching your kids about money is crucial to their success with money as adults.
@ Natalie It seems like a no-brainer, doesn’t it? Yet many parents don’t talk about it. At least in great enough detail where the child is able to take action and do something about it.
My parents told me “I need to save” but never gave me the tools I needed for success: 3 months emergency fund, Roth IRA, etc.
My boys will have a Roth IRA as soon as they are able. 🙂
How about not wanting to teach your kids that money is finite and to be greedy.
I want to make sure I teach my kids that money can always be made when you create value. I want to instill in their minds that, “people pay you for the value you create.”
If you want to make more money, then start adding more value. But it is important to know that money is for the purpose of creating value in your life and I think helping people out if you are in a position to do so is important.
Obviously there is a balance between teaching your kids money is important to keep so you can care for yourself and plan for your future, but it is also important to try to help people out.
What are your thoughts?
Hi Alex, I think you’re right about that, but you also have to be careful. It’s easier to make money in some fields and in some ventures than in others. Some people have careers that have pretty stable (not rising) income levels, and there’s little choice but to create a budget and live within it.
That said, I’m all for people finding ways to make money from outside sources. Not only will that increase your income, but it can also open the doors to a new career or business idea. I’d like to teach my kids that lesson, to always search out opportunities. And I certainly get your point about increasing income by creating value. Kids should grow up knowing that opportunity is out there, and they’re not trapped. Very good point.