Unfortunately for many, our kids like to watch us. Sometimes, it’s when we least want it, like when we’ve just stubbed our toe and are uttering fancifully adult words. Or maybe when that ref didn’t make the right call and we want to let him know just how we felt about it. Or, as many moms will frequently attest to, even when you’re sitting on the toilet, kids find a way to watch you. And when it comes to money, it’s hardly any different.
If our kids grow up without any purposeful advice on how to manage their money, they default to what they’ve been shown. And sometimes, we don’t always show them the best direction. Are you guilty of any of these practices?
1. Using credit cards unwisely.
This can be real trouble. Credit is too easy to acquire, but also too easy to get into strife. Not paying off your debts and acquiring items too quickly can lead to bad credit scores, harassing creditors and even bankruptcy. Practicing good habits, especially in front of your children, can save them years of hassle and worry. Try to avoid credit cards in general and pay cash whenever possible. Good habits can and should start now.
2. Giving in to impulse purchases.
Children can’t really restrain themselves at the best of times. By giving them financial goals to work towards and planning their purchases well in advance, kids can and will learn good spending habits.
If this is a problem area for you, try a simple trick. Never buy anything again. Just kidding. Try the 30-day trick. If you see an item you MUST have, write it on a list, and if after 30 days, you still want it, buy it. But most of the time, the impulse will have passed. This little trick can teach your kids about delayed gratification, one habit that will reap major benefits for years to come.
3. Not sticking to the budget.
By creating a budget, we can avoid making rash and unwise decisions. You can involve your kids in the budgeting for the family, and teach them about sticking to the plan. Kids are remarkably good at remembering the plan, and might even provide a good shaming for you if you come home with something not on the list.
4. Need Vs Want.
I think that when your child tells you that he NEEDS a ten-speed motorbike, he might not be clear on the concept of needs and wants. This behaviour spills over into our spending habits if we’re not careful. Take the time to teach your children about your needs (food, shelter, Ben & Jerry’s) and wants (more Ben & Jerry’s). Your budget should reflect that accordingly and your kids should see that.
These bad habits spread very easily to your children. But not all our money habits are bad. Start now to instil some good habits in them.
1. Consistent saving.
Make it a huge deal when you save money from your paycheck. And by doing so, you can teach the lesson that it’s important to have money set aside for the things we want, and for emergencies. Whenever your kids are given money, or earn some for themselves, make a certain percentage for them to set aside as savings. It’s been proven time and time again that a great savings account is the best indicator of a money-wise person.
2. Paying bills on time.
When the bills come in, it’s tempting to set them aside and forget they ever existed. And then you get bills that say “Past Due” or “Final Notice” or “Did you Forget You Owe Us Money?”. If kids can find that Christmas present you were hiding, they will find a way to locate these. Show your kids that it’s important to take care of the bills straight away, not only to avoid late fees and penalties, but to have peace of mind.
This relates to the Wants and Needs argument. If you’re demonstrating to your kids that they can sacrifice something now to have something later, this will pay huge benefits in the future. Teach your kids that they can’t go out for dinner 5 times a week because you’re saving for that Disneyland trip. And if they stop nagging you, they might be able to accompany you on that trip.
4. Enjoying the rewards of financial responsibility.
It’s important that your kids see and experience the fruits of your labour. By saving up for the year, you are able to go on that trip, or buy that bike, or whatever. By tying the rewards with the sacrifices, your children learn that it’s worth the time and effort into making good financial habits happen.
So, when your kids watch you and how you handle money, are they hearing good things like “budgeting” or “saving”, or bad things like “late payment” or “penalties”. How they associate with those terms comes down to you and your habits. So, the pressure’s on. Your kids are watching. What will they see or hear?