We want "kids to be kids," so money seems like a grown up topic that we can put off. Unfortunately, this desire can lead us to send the wrong messages about money. Think about what kids hear about money -- they see us fight -- then we say, "It's not an issue." What we don't say can also send the wrong message. It's easy to send messages that confuse our kids and harm the family's financial health -- but, you can change that.
1. Believing That Your Kids Must Have What Other Kids Have
This probably has its roots in our own childhoods. If we grew up having less than other kids -- or feeling that we did -- we don't want it to happen to our children. Isn't that a large part of why we worked so hard to succeed? But, is this a value we want our kids to have? Of course we don't.
I'm not saying that your kids can't have anything -- it's about balance. Maybe it's tough to be the only kid not to have a cell phone but then maybe it's tough just to have a cell phone and not a smart phone. Maybe it's tough to have last year's smart phone and not the newest, sleekest and coolest! There has to be a cutoff point. In a past blog I discussed the difference between need and want.
Stop and think, "Why am I doing this?" What message are you sending? There's nothing wrong with having nice things. But when kids get things without realizing how much they cost -- and, therefore the number of hours worked to earn them -- there is a value disconnect that can start a cycle of wanting and getting more and more. You don't want your kids to think they're cooler because they have cooler stuff.
2. Shielding Your Kids from the Cost of Things
Parents have many reasons for not talking to their kids about family's finances: "We don't want to take their childhoods away from them." Or you may have been taught, "Polite people just didn't talk about how much things cost."
Anything that involves money, and exchange of value, can be used as a learning tool -- if you take your kids out to dinner, show them the check. You can explain the tax and tip. For younger kids, it's a math lesson.
Shielding your children from the cost of things can keep them from getting a good start of their own, when the time comes.
3. Using Credit Cards to Buy Stuff for Your Kids When you Know You Shouldn't
The biggest financial danger to older teenagers -- college students especially -- is the credit card. The average undergrad carries $3,173 in credit card debt. The average senior will graduate with $4,100 in credit card debt. The teenagers most in danger are those who suffer from value disconnect.
Credit cards are the "Magic Piece of Plastic-Syndrome" -- our kids hear us say, "Oh, I don't have any money, I'll use my credit card." Worse yet, they just see us pull it out of our wallets and use this piece of plastic. In real life, the message you are sending to your kids is that you can buy things without worrying about paying for them, and this is just about the worst message a parent can send. Make sure your kids understand that a bill comes at the end of the month and you have to pay it.
4. Spending Money on Your Kids and Not Letting Your Spouse Know
Part of this problem is that most of us grow up being secretive about money. The other part relates back to value disconnect. We think, "If I can hide it, it didn't really happen!"
You don't want to teach your kids to be deceptive, nor do you mean to put them in the position of conspiring with one parent against the other. You recognize this -- "OK, here's my credit card. Go buy the video game -- but if your father sees it, tell him you got it last Christmas. He won't remember anyway." The solution to this problem is obvious -- don't do it. If you're not transparent with your spending and finances you can spiral into debt -- and you are teaching your kids the wrong lesson.
5. Spending Money on Your Kids and Not Letting Yourself Know
Your teen gets a weekly allowance but how much to you really hand out without even paying attention? "Mom, there's a bake sale for the team today." "Dad, we need $200 for the school trip." "I'm going to the mall with Jimmy. Can I please have some money for lunch?" Sound familiar? It's the drip, drip, drip method of money management. Not a good habit to get into.
Keep a No-Magic-Money Log for a few week and you'll be shocked at how much money you actually fork over to your kids -- above and beyond the allowance. You have to control every transaction that involves money leaving parents' hands and going into kids' hands. Your partner has to keep his own log.
Every expenditure gets entered into the log. If you kid asks for money, ask him specifically what it's for. If it's for "Just stuff," write that down as well. Your goal in the log is to reduce the amount of "just stuff" money to nothing and to account for everything. When you analyze your log be sure to look for patterns. Knowledge is, indeed, power.
It's up to you to teach your kids all aspects of dealing with money -- just be careful not to teach them the wrong lessons.
Do you have a story about a money mistake you've made? Please share with us in the space below.