We all want to provide for our children, and we have an overwhelming desire to do whatever it takes – regardless of your “situation” – to leave them with a better life than we had.
But sometimes we make the mistake of inadvertently setting our children up for the wrong kind of relationship with money. Here are 5 signs your child might be developing the wrong kind of relationship with money:
1. They’re Always Asking For Things
Whether it’s a new toy at Target or a piece of candy in line at the grocery store, if your child has a need to buy something every time he or she is in a store, this is a first warning sign.
Children learn from previous experience. If you give them something they ask for on impulse, chances are they are going to expect it again in the future. This expectation can come from a bribe you offered them in exchange for good behavior, or due to you just feeling like saying yes. Either way, you need to get into the practice of saying no.
Set a positive example for them by not impulsively buying things you weren’t planning on buying. If your child asks for something on a regular basis, a discussion about “wants versus needs” might be in order.
2. Your Child Spends All Their Money Immediately
When your child gets money, do they ask to go to the store right away? Do they bug you relentlessly for a quick trip to use that gift card that they just got for their birthday? If your child struggles to wait and plan their next purchase, you should help your kid think about savings and long-term planning.
Set some parameters for your child’s money. Open a long-term savings account for him or her and explain that 50% of all money earned or received will go directly into that savings account. The remaining 50% can be split up how you as a parent see fit. Try to give some percentage to a charitable cause, like a charity or church, or toward a long-term investment, like a college fund. Then you can let your child spend the rest how they want.
How to allocate the funds is not as essential as teaching your child that saving money is vital for good financial health. A discussion about emergency funds, long-term savings plans, and discretionary spending is important.
3. You Are In Debt
Unfortunately, if you are in debt you’re starting your child down the wrong financial path, without necessarily being able to help it. Children are a product of their environment; if they see you using a credit card to make purchases or witness constant impulse spending, they may mimic those behaviors.
It’s not a guarantee that all children will grow up to live that way, but many will grow up believing that debt is a normal way of life. It is important that you get and keep yourself out of debt. Show your children that debt is harmful to your success and happiness in life.
4. You Don’t Talk About Your Finances At Home
If you’re not talking to your children about money, you’re doing them a great disservice. Discussions about money need to start early and they should happen regularly. Children need to understand the concepts of a savings account, spending wisely, not purchasing on impulse, budgeting and, as they get older, investing and retirement planning.
There are many ways to approach these kinds of topics. You can use a game about money to start a dialogue; you can talk about budgeting while at the grocery store; you can use a garage sale as an opportunity to talk about resisting buying new things, and how to make money selling old things. These discussions and real-life examples are going to be the best tools your children can have in their future financial lives.
5. Your Child Lacks a Positive Role Model
What kind of financial picture do you think your children see? Do they see the negatives without being able to enjoy some of the positives? Are you making all the wrong choices and failing to set a good example? If you don’t have your own finances in order, your children will notice.
Kids have an incredible ability to see and hear things that we don’t realize they can. If we make poor choices, our children will come to realize the impact of the choices we’re making. And when they do, any discussions you’ve had with them about smart financial behavior will be negated. If you’re going to “talk the talk,” you better be able to walk the walk.
The greatest gift we can give our children is a straight and clear path to a happy and successful life. One step along that path is personal finances. Start paving that path for your child today!
What are some things you worry about with your kids and their future finances? What steps are you taking now to ensure they’ll handle money well later on? Share your tips in our comments section below!
Jessica Streit is a single mom, former educator turned freelancewriter and student working on her Masters Degree in Education. She is the author ofThe Debt Princess, a blog about making better choices after landing in debt. She uses the mistakes she has made to teach others “what NOT to do.”