6 Bad Personal Finance Habits To Avoid Teaching Your Kids

As a parent I’m often thinking about the welfare of my son and how we’ll teach him about certain topics when he gets a little older.  How will I teach him about our faith, how to do the right thing and how to live and eat healthy?  We also want to make sure that we teach him good financial habits as well, and make sure we set a good example in our own lives that he can follow.

Some of us were never fortunate enough to have learned sound financial management through our parents, and as such we’re now trying to break the cycle by passing down what we’ve learned, and teaching our own kids about how to manage money.

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So what are some habits and behaviors that you should be careful about displaying when you’re around your kids to ensure that they learn sound financial principles?

bad financial habits to avoid teaching your kids

6 Financial Patterns To Avoid

When you’re with your kids, they’re probably watching you more than you realize.  You need to be aware of what financial behaviors you’re putting on display, and whether they’re healthy for your kids.

Here are some financial behaviors, attitudes and habits you may want to think twice about engaging in, especially in front of your kids.

  • Just go ahead and put it on the credit card:  Many of us can think of times when we were at the store, saw something that we wanted, and  despite not having the cash to pay for it went ahead and bought it anyway.  For me when I’ve done this in the past it usually involved some sort of electronic gadget or expensive gaming system.  Constantly putting things on credit, however, can help to teach our kids that there’s no need for delayed gratification. If you want it you should buy it.  Instead of doing that, however, why not teach your kids how to save up and pay cash for the things they want, and then only after having a “cooling off period”.
  • Depending on others, and not yourself: I often see or hear of family or friends who go from one bad financial decision to the next, but they never learn their lesson because their parents or a family member always bails them out of trouble.  When they have problems with their car their parents lend or give them the money for a new one.  Buying a home?  They get the down payment from their parents.   Instead of showing how you’re dependent on others, show your kids how you can be self reliant.  Save up an emergency fund to cover unexpected expenses.  Pay your own way, or don’t buy!  If you don’t change, your kids will be coming to you for money one day!
  • Spending more than you make.. all the time:  If you’re constantly running out of money before the end of the month comes, you’ve either got a problem with not making enough money, or with spending that’s out of control.  In most cases people are spending too much money on things they shouldn’t be when they’re strapped – like cable tv,  the highest level of internet service, premium cell phone plans and more. Cut the things you don’t need, and go back to basics.  Teach your kids that it isn’t ok to constantly spend more than you make. It’s important to stay on top of your family budget, otherwise you (and your kids) will end in financial ruins.
  • Money can buy happiness:  I believe far too many people spend their lives trying to find happiness in things – which end up being empty shells.  They search for it in things like money, possessions, people and careers.  When your kids see you trying to buy your way to happiness through things – they may think that they can do the same some day.  Instead teach them about the things that are important in life like family, faith and hard work.
  • No budget needed:  It can be easy to get caught up in the day to day grind, and not keep tabs on our family budget.   When that happens you can quickly develop leaks in your bank account, and the money quickly goes down the drain.  Instead, come up with a budget that your family can agree on, set savings and retirement goals, get insurance to cover contingencies, and teach your children about financial topics.
  • Appearances are more important than cost:  Far too often people would rather appear successful than actually be successful.  They buy the latest and greatest of everything whether they need or want it, mainly to keep up appearances with family and friends.  This can set a horrible example for the kids, making them value how they appear more than actually trying to do their best to work hard, succeed and be able to buy things when they can afford it.  Instead, stress the importance of substance and of only buying things when you need them – and for the right reasons.

Teaching children about money isn’t easy, and won’t happen overnight.  It’s a process of showing them the right way to go through our actions,  as well as through our words.

As long as you teach them the right way to go, and then are aware of what actions you’re giving them to emulate, you’ll be far ahead of the curve.

What are some bad financial habits that you’re trying to avoid displaying, either for your kids – or for those around you?

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Last Edited: 6th June 2012

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Comments

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  1. says

    I love that you emphasize showing kids through your actions how to manage money. I’ve seen a lot of parents tell their kids one thing and do another, not realizing that kids watch every single thing they do! Your kids are lucky that they’ll be raised understanding how to manage and prioritize money. I hope more people do the same because learning it adulthood can really set you back!

  2. says

    Not only are these good financial habits to pass onto your kids, they are also habits you should yourself anyway. So as long as you are properly manage your finances and not making any of these kinds of mistakes, you should be setting a good example. I think they key though is that you go further than just setting the example. At some point you actually have to explain these things to them and reinforce why it is so important. Your kids may see you do certain things, but if they don’t know why you do it, they may be less inclined to follow suit.

  3. says

    Thanks for your post, which seems very appropriate. I think in this issue there are two parts in a single equation. “The other side” refers to what we should do with our spare cash. I think parents should teach our children to invest their money. Something common to all professions that can engage our son when he grows up, it’s going to handle money. I think we should teach him that if he manages to save money and save it in a bank account, he will receive almost “zero” a year. As inflation is about 3% a year, then will be losing part of their savings each year. So: why save? . Our son should learn that if you invest your money in a Diversified Mutual Fund, the win by about 3% per year. This means that in terms “real” did not win anything because it will be no inflation “eaten”. By this I mean that in both cases, will always have the “psychological temptation” to spend their savings. A formula that has worked me very well is to invest my money in instruments that yield me much more than inflation each year. This generates me the “psychological temptation” to save more, to invest more in order to earn more. This means you enter a virtuous circle in which you live on a budget, while you perceive as your wealth grows rapidly.

  4. says

    Teaching kids good financial habits has become a huge point of conversation for many financial bloggers. Maybe Gen Y is suffering a little from lack of financial “home training?” I definitely agree with all the lessons that you mentioned but would like to stress the importance of saving. Budgeting and saving are two things that seem to go hand in hand and while kids learn how to calculate what to spend their money, they need to understand some of that money needs to be put away for a rainy day or to buy something in the long-term. Perhaps, we need to teach our kids to view money more with a long-term attitude.

  5. says

    Parents can have a hard time knowing what information to share with their kids about their personal expenses, so I especially see the value in the little lessons such as appearance vs cost. A father and son shopping can compare similar products together, have a conversation, ask what they reasonably need, and learn a lesson in daily life when sharing the budget expenses could be overwhelming. All great lessons though!

  6. says

    I feel that it is important to share you family finances with your children. I don’t mean you have to tell them everything, but they need to understand what smart savings and frugal spending is. My daughter is still really young, but I eventually want to teach her that impulse buying can create financial problems. When I am going to make a big purchase I research it and usually wait a couple weeks to make sure it is something I need. If after two weeks I feel I need it then I go ahead and buy it. I want to teach my kids to have patience when it comes to spending.

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