Kids take in and soak up everything parents do, including how we use and talk about money. Managing finances can be complicated and challenging for grown-ups, but family attitudes about spending and saving shape how kids will deal with their money in the future. They absorb the beneficial lessons and the less helpful ones and these are some of the money mistakes financial experts say kids learn from parents and what to try instead.
- Money is a taboo topic- There’s this idea that talking about money is bad, especially if you’re in debt, but that leaves kids in the dark and confused about the right way to manage it. Budgeting expert Andrea Woroch says if we don’t talk to our kids about money because we don’t want them to worry, we’re teaching them it’s not a subject we discuss and miss the opportunity to teach them early.TimSheehan, CEO and co-founder of the family-focused financial literacy app suggests starting small to help little ones learn the ropes of decision-making, like explaining why you spend money on groceries instead of takeout.
- Money is always around, no matter what- The financial experts stress the importance of helping kids understand that people earn money by working and that it doesn’t just “grow on trees.” Starting with something as simple as paying them for a chore can help them make the connection that if they work, they can earn money. Then have them set a savings goal and work toward it to teach them about making trade-offs instead of giving in to instant gratification.
- Wants and needs are the same thing- It’s also important to teach kids the difference between wants, like new toys and candy, and needs, including shelter and healthy food. Instead of shaming them for wanting a $100 sweatshirt by saying, “That’s a waste of money,” send the message that we have the power to make decisions about money by telling them, “We put our money toward other things.”
- Credit cards are bad- Some parents tell their kids credit cards are evil and while you can get into debt with them, the experts advise teaching children how to use them wisely to build credit.