Repaid.org Banner Ad
 

Home / Budgeting / Money Mistakes Parents Commonly Make

 

Parental Money MistakesDo you know all of the money mistakes that your parents made while you were growing up? If you are like most Americans, you haven’t the slightest clue. The closest I came to being aware of my parents financial situation was when they divorced and our home was foreclosed on. I learned absolutely nothing useful from that incident. Growing up I was completely oblivious to financial issues. Later, I found out that I was not alone, most parents are tight-lipped about finances. Here are a few common money mistakes that parents make.

Tight Lips Sink Future Ships

Personal finances are perhaps the most important life-long issue we will have to face. There is no way to avoid making critical financial issues repeatedly. Unfortunately, most of us are sent into the adult world less than clueless about finances. The only solution is to include your children in age appropriate financial decisions. I started with price comparison while shopping, then moved to delayed gratification. Little things like saving money to buy a pricey item can help a child avoid credit card debt when they are adults. Next, move to the importance of saving. Make sure a child knows how to balance a checkbook, even if it is something they brush over in school.

After that groundwork is laid, teach them how to build a budget. I waited on this step until my children had their first jobs. Once employed, they could have a cellphone, if they paid for it. Budgeting for a cellphone line is easy, so throw in something else they will probably want…a car. As your child matures, increase the complexity of their budgeting skills.

Another aspect of being tight-lipped is not letting your child have a honest peek at how you operate financially. Whether it is good, bad, or ugly, there are plenty of useful lessons already built into your personal finances that will help your children later in life.

Over Indulging Children

Many parents came from poor or lower middle-class homes. While there is absolutely nothing to be ashamed of, this can lead to an internal need to provide everything a child asks for. Unfortunately, that only instills a need to be selfish and a belief that everything has to happen now. A child that is provided everything learns nothing. In a home like that how is a child supposed to learn how to save, avoid credit card debt, or even how to plan for the future? A study by Stanford professor Walter Mischel showed that children who learned that they had to wait for somethings grew up to have fewer behavioral problems, less stress, stronger friendships, and higher SAT scores.

Arguing About Money

While there will always be money disputes during a marriage, how you handle them is the issue. Arguing about money in front of your children, whispering where you can be overheard, and acting embarrassed or ashamed when faced with money questions are all harmful behaviors. A study recently published in the Journal of Family and Economic Issues conclusively demonstrated that kids whose parents argued about money were twice as likely to have two or more credit cards and three times as likely to be carrying a burdensome debt load. The solutions could be as simple as leading by example. In order to teach your children financial responsibility, you have to live comfortably within your means.

The best thing we can do for our children seems to be act the exact opposite of our parents. Talk openly about financial decisions. When things are bad, let the kids know. Have honest talks about credit cards and their potential negative affects on your everyday living situation. Most important of all, never duck a money related topic with your child, no matter their age.

 

About the author: Jerry Coffey

 

Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.

 

Recent posts in Budgeting

 

9 Comments

Leave a Comment

Your email address will not be published. Required fields are marked *

CommentLuv badge