Most of us want our children to grow up financially literate. As a parent, we teach our kids that money doesn’t grow on trees, we teach them to save and to manage their pocket money well. But children learn by example – are you inadvertently contradicting your well-intentioned advice to them by setting a bad example?
Danelle van Heerde, head of advice processes at Sanlam Personal Finance, sets out seven bad money habits you may be passing on to your children:
You’re not in control of your monthly budget
Not planning your expenses properly each month may result in you buying luxuries at the start of the month, and then not having enough money for necessities – such as paying for your kids’ promised school trip – at the end of the month. This type of spending pattern may become ingrained in your children’s own lives as they get older.
You don’t talk openly about money
You don’t need to go into details, such as what you earn, but kids need to learn how you as a family handle your finances. Is it about having the nicest things possible, or is it also about putting money away for a rainy day? If you and your spouse have different spending habits, it’s important that you both compromise and agree on a budget for certain things. Besides causing relationship strain, hiding expenditures from your spouse – such as those expensive new shoes you bought – sets a very bad example to your kids.
You don’t save any money
Setting an example here is difficult, since your children may not be able to see you actually saving money. However, it is a good idea to tell them that you are doing it, and why – for example, the beach holiday you’re all going to have at the end of the year. Encourage them to save from an early age – five years is not too young – by giving them small amounts that they need to save for short periods. For further motivation, you can agree to match whatever they save.
You use credit cards irresponsibly
Kids today often think that money comes out of the plastic cards you carry in your purse. Explain the difference between a debit and a credit card, as well as the difference between the interest you earn, and the interest you pay. It’s a good idea to pay with cash in your kids’ presence now and again.
You are inconsistent in saying ‘no’ to demands
When out shopping, it is easy to give in to the demands of wailing children at the check-out counter. Encourage them to use their own pocket money or savings for items they want.
You confuse wants with needs
Your kids should learn that we can’t have everything we want in life, and that each family’s financial situation is different. Parents often want to give their kids everything they never had as children, but this results in a lack of understanding of the value of money. Kids need to learn to compromise, and that they can only have what the family can afford.
You try to outdo other parents
Kids don’t need to have the most expensive birthday party, matric dance dress, or extra-mural activities. For example, you don’t need to throw the most lavish party in your neighbourhood for your kids to have fun. Based on your budget, you can give them choices – would they prefer a jumping castle or a clown? They need to distinguish what is important in life – it is about having fun with their friends, not spending the most money.
“Teaching your children good money habits starts with you. What you do is just as, if not more important than what you say to your kids. Your example could form the basis of life-long habits – so make sure you ‘walk the talk’ in your own financial habits on a daily basis,” Van Heerde concludes.
