5 dangerous mistakes you are making when teaching your children about money.
Teaching your children about money from a young age helps them grow up with a successful perspective. As long as they’re properly taught the value of money, as well as the best ways to utilize it, they’re more likely to grow up to be independent and self sufficient adults.
Just be sure that your quest to educate your children doesn’t inadvertently become harmful. You might think you’re helping, but the advice you give may not stack up against the way the real world works. Make sure you aren’t distorting your child’s perception of the way financial independence and successful money management should work.
Overemphasizing College Salaries
Every great parent wants to raise a child that grows up to be an educated, successful adult. That’s why so many parents emphasize the importance of college. Things have changed. Tuition is sky high, and many graduates wind up with little to show for it. The combination of debt and the difficulty your child might face attempting to find a job in their field might turn out to be a setback.
Talk to your child about jobs with great salaries, rather than college education. It’s possible for your child to go to trade school or attend vocational training, find a job on a job board that pays spectacularly, and live a happy and productive life without a college education.
Making a Savings Account Sound Sufficient
Savings accounts are great. You should open a savings account for your child and help him or her become accustomed to saving money for the things they really want. The only problem with a savings account is that they only keep money safe – even high yield savings accounts won’t do much to help money grow. Your child might be too young to trade, but you can still start talking about investments and the best ways to utilize extra cash. As they move into their late teen years, they might even start looking at prospective investments that would grow their childhood savings.
Pretending to Be Broke
You could be inadvertently teaching your children the wrong idea about money when you fib to get out of spoiling them. Your child wants a toy or fast food for no particular reason. You tell your child you don’t have money, rather than that you simply don’t want to buy it. You’re giving your child the impression that you go broke, and that’s the wrong thing to do.
If you really can afford something but don’t want to buy it, turn that into a teachable moment. Tell your child why you don’t want to buy it. Tell them it makes more financial sense to cook at home rather than pick up cheeseburgers. Tell them that the new toy they want isn’t as important as the new coat they should get before the cold weather comes. Teach priorities.
Making Credit Cards Sound Evil
High credit card debt is a huge hassle and no one in their right mind ever wants it. You don’t want your children to deal with a mountain of debt, but teaching them that credit cards are evil might be the wrong way to go. Rather than dismissing all credit cards, explain to them how to choose a great credit card with low interest and rewards points they can use for things like travelling. Explain to them the importance of keeping a low balance and being smart with their credit use. Let them know they shouldn’t have more than one or two credit cards. Demonstrate credit responsibility.
Assuming Their Financial Responsibilities
When your teen finally gets a driver’s license, it’s going to feel like a huge relief. You don’t have to drive them around everywhere. You can send them out to get milk and bread. Your life gets a lot easier. You might even be willing to pay for a car and insurance just to catch a break. These things are often too expensive for a teen to pay for, even if the teen has a job.
Rather than assuming the full costs of everything, match the amount of money your teen can put up. Pay for half to help your teen until your teen can get a full time job. You can start with their smartphone bill if a car isn’t quite on the horizon yet. In doing so, you’ll be teaching your teen how little of their income will actually be disposable. Bills come first, and instilling that in teens will help them to grow into young adults with a realistic perspective on priorities.
The earlier you start teaching your kids about money, the earlier they’ll fully grasp the concept. Be sure you aren’t accidentally misleading them or giving them the wrong impressions in an attempt to be helpful.
Alana Downer is an avid blogger, an occasional traveller, and a personal finance. Following her passion for writing, Alana can often be found online, sharing her money management tips with people who want to live better and achieve financial independence. Currently, Alana is working at Learn to Trade, an educational resource for investors.