Managing money is no piece of cake if you were never good at it, which is why it typically doesn’t get any easier when you’re a parent. The problem with this is that if you have bad spending habits as a parent, it’s very easy to pass it on to your little sponges, also known as your children.
The best thing you can do for your children – and yourself – is to pinpoint common mistakes you’re making so that you can correct them and get your children on the track with proper money management.
Some common bad-spending mistakes parents make include:
- Being an Impulse Buyer.There’s nothing more difficult than trying to teach your children discipline when you don’t have it yourself. Yes, nobody’s perfect. But if you want to navigate your children away from bad spending habits then you have to lead by example. This means if you go to the grocery store with intentions of spending $20, don’t walk out with $100 worth of food. Instead, make a list with your children of the items you need, then as you put them in the cart and cross them off the list. Don’t buy more or less. This teaches discipline and consistency, creating a good spending habit.
- Lying About What You Have. Another mistake parents make is telling their children they don’t have the money when they actually just don’t have it in the budget to spend the money. Children are constantly watching for inconsistencies, so if you say you don’t have the money then turn around an spend it on something else, they will think you just don’t want them to have whatever they want. So instead, just tell them the truth; you have it, but it’s not in the budget.
- Not Explaining Where Your Money Comes From. Children will try everything they can to demand what they want from you. The problem is, they have no concept of what it takes to bring in the money you’re spending on them. If you send them the message that money is magically conjured in a lab in your basement, they will believe it. However, if you teach where your money comes from and why it’s spent the way it is, you can’t send a message of responsibility and self-discipline.
- Buying Things Because Other Kids Have It. Kids provide better advertising campaigns than any professional marketing team ever could. When your little girl sees another girl with a Hannah Montana doll, she is likely going to “die” if she doesn’t get one, too. If you immediately grab her hand, jump in the car and drive to the nearest toy store, you send the message that buying what others buy takes precedence over spending responsibly.
- Placing High Value on Label Brands. You may be oh-so-into only buying label brand food, products and clothes. However, there are quality items found in generics as well. In fact, many generic items are produced by label brand manufacturers. So when providing the example of what it’s important to buy, it’s good to show that generics are not only less expensive, but offer good quality as well.
- Using Your Credit Card for Everything. Whipping out the plastic may be what you’re accustomed to doing. But plastic offers open-ended purchasing opportunities that cash doesn’t. So instead of paying for everything with credit cards, start paying with cash when you’re around your children. This way, they can actually see with their eyes that there is a beginning and end to purchasing possibilities with the $20 bill in your hand.
- Providing an Allowance with No Guidelines. Creating money in that magical lab again, eh? Well, at least that’s the message you’re sending if you offer your children a weekly allowance with no chores or responsibilities attached. It gets even worse if you provide a guideline-free allowance then still offer money in between pay dates. They will once again attach no value to money, feeling that it is always available and can be spent on anything.
- Scolding Them for Making Mistakes. As you teach money management, your children may make spending mistakes. Nobody’s perfect, which means they don’t have to be either. So as they learn, encourage them and let them know that a mistake is okay as long as they continue learn and try again.
Helping a child with good spending habits definitely takes time and planning, but you can do it. A great way to get started is by creating a family budget that includes them. You can incorporate the allowance (with rules) and even have them taking part in small-level spending (paying for their own treats when they go grocery shopping instead of you, or having them save up to pay for video games and extras). Yes, it will take discipline and mindfulness on your part to move your children toward good spending habits, but won’t it be worth it to know that later on in life your children will be able to manage bills and extras without come to you for a hand out?