It may be time to discuss the real financial facts of life with your child.
Taking the time to teach children age-appropriate financial habits, leading by example, and using real-life experiences is the key to helping them become financially responsible adults.
Common Mistakes & Solutions
Mistake 1. Believing your kids must have the same things as their friends or peers.
A solution: Ask yourself: Why am I considering buying this for my children? There is nothing wrong with nice things, but children often do not realize how expensive they are, and how much effort they took to earn them. It can start a cycle of wanting and getting and never being satisfied.
Mistake 2. Shielding your children from the harsh realities of money.
A solution : Any activity that involves money and value exchange can be used as a tool for learning. Without an understanding of how money works, kids won’t be able to develop a healthy attitude toward it. For example, showing your children a restaurant bill is one way to explain costs, taxes, and tips.
Mistake 3. Using credit cards thoughtlessly like a “magic card ” vs. a valuable financial tool
A solution: Consider giving kids allowances, so they will be able to make the connection between money and tangible things. By using a budget, they can learn to distinguish wants from needs.
Mistake 4. Spending money on your children without thinking
A solution: Instead of handing out money for miscellaneous wants and asks, you can decide what you think they should earn by doing chores in the home or work outside of the house. Explain that you are not a bank and make sure that they understand the rules.
Mistake 5. Intervening when kids are earning and saving for a want
A solution: If your child is earning money and saving to get a special item, instead of intervening and buying it for them, encourage them to reach their goal and celebrate their success.
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