When it comes to teaching kids positive financial habits, actions speak far louder than words. It's important to not only talk to your kids about financial topics but to see these topics enacted in your everyday life. Practice what you preach and don't let your kids catch you making these money mistakes.
Using Credit Cards For Everyday Purchases
Most of us know about or have experienced the pitfalls associated with credit cards and, hopefully, you want to teach your children about how to properly use credit long before they apply for their first credit card. If they see you using credit cards to pay for everyday expenses such as groceries, gas, or take-out, they’ll get the idea that credit cards are meant to make up for a cash shortfall. What they won’t understand is how quickly those small purchases can add up and spiral into long-term debt. Using a debit card (once you’ve explained the difference between debit and credit) or cash to pay for everyday purchases sets a good example and helps to establish behavior long before they have a credit card in hand.
Not Following A Budget
Kids are sponges and they will pick up on it if you’re always unsure of how much money you have in your account or whether or not you can cover all the bills for the month. Believe it or not, that kind of financial stress can affect the entire family. But planning and following a budget can help to eliminate some of that uncertainty and make you see how much money you have coming in, how much is going out and exactly where it’s going PLUS it reinforces a great financial habit to those that look up to you for guidance, your kids.
Not Saving For Emergencies
Life is unpredictable. Life is MORE unpredictable when you have kids and emergency expenses are more than likely going to happen. And if you're not ready for the unexpected, your kids take note. When planning your budget it's important to not only teach them about the importance of saving for emergencies but to actually save for those emergencies. Don't make it an afterthought. Pay yourself first so you and your family have peace of mind.
Not Talking Openly About Money
We cannot stress enough the importance of having open and honest conversations about money. Money should not run your, or their, lives but it is a facet of it so welcome conversations about anything and everything money related. How the stock market is doing, the price of gas, deals at different grocery stores, the cost of college, the cost of home ownership. The more transparent you can be to your children about the realities that come both in your every day life as well as the external market ecosystem will only reinforce learning behaviors and set them up for their financial future.
Spoiling Your Kids
You love your kids and want nothing more than for them to live a long, happy life. So stop spoiling them. It can be easy to fall back on indulging their every whim but it indirectly teaches them bad financial habits. Help them to learn to value and take care of the things that they own by showing and teaching them what it took to purchase those items. Make them work for the items they want or, at the very least, have a conversation with them about what it took for you to purchase that item for them. It might be hard at first but, longer term, they will be better for it.
So take action, lead by example and prepare your teens for their financial future.
Financial Freddie brings you the tools to help teens and parents discuss financial topics, habits and trends.
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Although financial literacy never came up in school, I am certain that at Copper: we will be the financial tech and literacy backbone for teens across the country and provide the resources needed for parents to help us in this cause.