When it comes to teaching your children about money, there is no one right way. Each child is different with different goals, likes and dislikes, and expectations. There is a lot of emotion surrounding how to raise your children and to teach them in the right way, but rather than compile a list of absolutes on what you should do, here is a list of universal mistakes made by many parents.
I didn't have a lot growing up, so I want my kids to have what they want when they want it.
Helping your children understand that they can't always get what they want when they want it is one of the best things you can do for them. The ability to delay gratification has shown in studies to lead to improved test scores, less stress and fewer behavioral problems. On the other hand, children who are riding the en-tidal-ment wave on Mom and Dad's dime can get confused when they become adults and their parents suddenly expect them to do it on their own. Parents are then stuck giving children economic out-patient care when they would rather focus on retirement.
We're bad parents if we don't pay our kids' college costs
College tuition is increasing at a 7 percent rate each year, so if you have little ones you may need to rethink this one. Too many parents sacrifice their financial future so their children can go to their dream college. When it comes down to it, they can get student loans, but you can't get retirement loans. Bankrupting your financial future for your child's college costs will most likely mean he'll be supporting you when he's trying to start a family.
The first thing to consider is researching colleges where your children can get a solid education without the Ivy League cost. Encourage them to work during high school to save up for college. Working full time while taking college classes full time isn't convenient, but it happens. Pushing your children to take responsibility and sustain themselves can actually cause them to work harder to get better grades and qualify for academic scholarships. This isn't meant to knock on those who do pay for their children's college costs. If you can do it and want to, more power to you, but at least hold your child to academic standards in order to keep that funding coming.
We have to work long hours to give our children what they need
What your children really need is you. There isn't a question that you need to work hard to provide your family with their basic needs, and many parents have to take an extra job to make ends meet. There are some circumstances that you cannot easily get out of, but there are still many parents who extend those needs beyond the basics. It's important to consider what you define as a need for your children. Studies show that families who sit down together for dinner are more financially secure. We also learn that there is no success that can compensate for failure in the home. Hand in hand with that, there is nothing you can buy your children that can compensate for the time you don't spend with them.
We are deep in debt, but thank goodness our kids don't know
You may think that your money habits are private, but your kids can sense if things are going wrong, even if they don't know what. If you have a lot of debt, chances are there will be arguments and tension. Resist the urge to find superficial ways to lead them to believe things are good. Buying them the newest gadget will only lead you into further debt and your children won't be fooled. Sitting down and explaining things to your kids cannot only help them understand what is going on, it can also help them to learn from your mistakes.
We'll teach our kids about money when they're older and have some
The problem is, by that time it's too late. Children, especially teenagers, are bombarded daily with society's financial ideas and habits. Teaching your children about money and involving them in some family financial decisions can go a long way in helping them understand the value of money and the importance of the decision-making process they will go through when they are adults. When your child wants something, rather than just saying, "That's too expensive," or, "We can't afford it," help him understand the other expenses that come with raising a family. If you feel comfortable, show him your budget. Encourage him to help you plan family vacations so they can see just how expensive it is. Encourage him to help save for it. He will appreciate it more.
Teaching your children about finances is difficult. The most important thing you can do is teach them by example, but you must be actively teaching them. Talk to your kids about money and you may profoundly impact the rest of their lives.