Raising children in general can be tough. Teaching them financial savvy and lessons about money can be an even tougher challenge, and unfortunately, there are five alarming mistakes that many parents are making with their children.
Read on to see if you have been doing any of these:
Becoming a human ATM machine
Parents need to simply resist the idea of handing out money on a whim to children, just because their children “ask” for money. Establish an allowance program for chores, and have them purchase that they “want” with their own funds from their own hard work.
Overlooking Every Day Lessons
Use grocery shopping as an opportunity to discuss with your children why the family should buy generic brands, or buy $1 items to stock up on essentials. Using every day opportunities to point out ways to save or what values to place on what can lead to long-term money savvy in your children.
Not involving Kids in Longer-Term Goals
What kids does not want to go to Disney World? So, get your children in on planning a mega vacation. Have them contribute a portion of their allowance to the “Disney Fund” or explain to them other sacrifices that the family will be making in order to afford the vacation. This logic can be applied to any other long-term family goals, like buying a new house or saving for their college tuition.
Missing the Opportunity to Motivate their Savings Habits
Create a matching program with your kids. Every time they deposit $10 into their savings account, you deposit $10 into their account too. This is a stellar way to explain and then execute to them how a 401(K) program works with an employer, which they will hopefully one day get to participate in once they become working adults.
Not Explaining How Credit Cards Work
Credit illiteracy with teens is becoming a growing problem. Partially, because many teens are not taught from an early age exactly how and when to use a credit card from their parents, so when they do receive a credit card, they do not have an understanding of how not to get into credit card trouble. As a parent, you must make it a priority to explain to your kids how credit cards work, what a credit report and score is, and how credit cards impact their credit report.