Money mistakes you're making with your kids

As parents we all want the best for our children, but being only human we occasionally make mistakes in what we teach them about growing up. Despite your best intentions, you may take the odd step down the wrong path, be it about eating habits, sleeping patterns or even your child’s financial education.

Of course, nobody sets out to push their children down a financial helter-skelter, but there are some mistakes that we frequently make when introducing our children to the concept of money. It’s easier than you may realise to send your kids money messages that are confusing or to unconsciously teach them bad habits. These are often simple things that can just as easily be avoided – check out our list of common blunders…

1. Avoiding the money conversation
For one reason or another, talking about money is something of a taboo in 21st century Britain. But while it may seem like bad manners to discuss your and others’ finances and banking habits, the truth is that open discussions are the only way to demystify the possibilities and pitfalls of money management.

Do not delay for fear your child is too young. The time is always right to start introducing them to the concept that money has a value. Explain in easy terms using tangible household examples what a budget is and how you arrive at yours. Discuss also how you make financial decisions and how the various aspects of dealing with your finances makes you feel.

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2. Spend, spend, spend
Just having it, isn’t a reason to use it. If your child receives a gift of money, are you the first one to suggest a trip to the toy shop? You are not alone, but does that make it right? Instead of rushing out to blow their windfall on an impulse buy, use the opportunity to introduce them to the concept of saving.

If the suggestion of saving elicits moaning and complaining, explain that delayed gratification can be a good lesson in life. Flick through catalogues or favourite websites to find something special your child can save towards. You can of course start saving in a simple piggy bank, but why not allow them to feel really grown-up by opening a first savings account? Learning to manage your finances early is a great cornerstone for future financial security.

3. Always bailing them out
This is a bad habit that can start early on. However, to avoid it, you will need to toughen up. If your child blows their pocket money on sweets and then realises that there’s nothing left for stickers, there may be tears. And crying, as smart kids know, is a sure-fire way to pull at parental heartstrings.
Remind yourself, however, that kids need to know that there are consequences to overspending and that the Bank of Mum and Dad is not always guaranteed to bail them out. Instead of falling at the first hurdle, explain the difference between wants and needs. Contrast examples of things they need every day like food and clothing, and products or toys they might want but don’t necessarily need. It’s a great way to teach them to exercise restraint when spending and instead consider saving.

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4. Telling white lies
The next time your child asks you for money, notice whether you employ a little white lie to see yourself out of what you perceive to be an awkward conversation. Notice if you say something like ‘I don’t have any on me’ or ‘I’ve spent it all’. Once again, start as you mean to go on by being open and upfront.

Explain to your child exactly why you do not want to give them the money for whatever they are seeking to buy. Introduce them instead to the concept of evaluating whether or not to purchase an item, what its value is and whether it should be a priority – another invaluable skill in setting a good foundation for future financial security.

5. Failing to provide a united front
As with any aspect of parenting, the best approach is to provide a united front. What message does it send out if Mum watches every penny, while Dad regularly splurges on whatever takes his fancy? Consequently your canny little one may learn to bypass Mum and take their demands straight to spendthrift Dad.

Sit down together as a team and set limits on what you will and will not allow. Decide on allowances and budgets for every area of family life. Underline this message by showing your child how you budget. Explain how you’re cutting back on household expenses in order to afford a family holiday. Let them join you on the weekly shop so they can help choose the best value deals. It’s a valuable lesson and one that can make your job a little easier too.