4 Money Mistakes You May Be Teaching Your Kids
Kids want it all, and as parents you get tired, worn-down or just sick of seeing them throw tantrums every other minute. So you start giving in — once or twice — and before you knew it, your child starts to expect the same from you every time they throw a tantrum. Nothing spells “tantrum is the key to mummy or daddy’s heart” more than you giving in to them.
You will eventually find yourself spending tons of cash in the process. Here are four frightening money mistakes parents commonly make and why you should avoid them.
1. Keeping up with the Joneses
Peer pressure didn’t just affect you when you were a teenager trying to impress your friends in school. Entering parenthood, you will find yourself falling into the peer pressure trap before your newborn even begins to say “mummy”.
As parents raising kids, you are often invited to gatherings like birthday parties or play dates where you meet and socialise with other parents. You may hear parents rant about how miserable their lives are while some brag about theirs — from their recent shopping trip to Europe, to getting an iPad for their child just because he or she is such a sweetheart, or how planning an extravagant birthday party for their child is stressing them out.
This is when peer pressure sets in. You find yourself planning a party you can’t afford, or checking out prices of iPads the next time you are at the mall. They could be things that you do not need at all, but you buy it for the sake of blending in with your “friends”.
This is an easy temptation to fall into. There is no end to it because once you allow it to get to you, you will never get out and nothing is ever enough to compete and supersede others. Eventually the excess spending spirals out of control and the debt mounts. This is not the message you want to pass on to your children as they are growing up.
Be open with your children. Tell them that you choose to spend your money in the following ways because that is what you can afford and you are saving for bigger goals like sending them overseas for their tertiary education. You do not believe that people are more superior because they have more expensive things. Material possessions should not reflect who we are as a person or as a family.
2. Giving rewards inappropriately
In order to get their child to do what they want them to, parents start to give rewards for simple things like doing their chores or homework. Before you pat yourself in the back for finally cracking the parenting code, consider the message you are sending to your child.
Children should be trained to be responsible of doing their own chores, or completing their school work. Allowance shouldn’t be given just for completing tasks your kids should be doing anyway. In doing so, you actually trivialise the effect of a reward for the next time you really want to reward them.
Should you be paying your child every time they flush the toilet after using it? If your answer is no, then you should stop rewarding them for things like making their own bed, or putting their dirty laundry in the laundry basket.
The better way to reward your child is to set an allowance according to their age and their needs, and only give any additional allowance for “extra” help they render, such as helping another sibling with their homework, or cleaning up the whole house.
Another “no” parents should avoid is to reward their children for every ‘A’ they score in school. Instead of making their achievements monetary, let them know the importance of self-satisfaction when one does his or her best and achieving the goal.
3. Spoiling the kids with brand
We all can be a little vain or shallow at times and brands can play a big part on how we want others to see ourselves. And sometimes, this behaviour can affect the example parents try to set for their children.
Look at the ingredients or materials used in the product instead of just the brand – the product you are buying should be suitable and safe for your child. For some parents it could be the sense of obligation of providing their children with something they did not have growing up – nevertheless it should be within affordable range.
Sometimes you overpay for boutique clothes or brand-name apparel for your child when you spot a sale. Their wardrobe is messy and temporary because they would most probably outgrow their sizes within months, which is why it is a waste of money to spend hundreds on a pair of jeans for your growing three-year-old.
According to a study done by Dr. Stephen Cowan (an American pediatrician with 25 years of clinical experience), indulgence actually weakens your child’s powers to survive, deflating motivation and feelings of success. Indulgence limits freedom by inflating a child’s sense of entitlements. Instead of just giving into their every wants, it is good to teach your child the value of contentment with whatever they have compared to people who do not.
4. Hiding the cost of things from your kids
When we were growing up, our parents most probably kept us out of the household’s money matters. We had clothes to wear, food to eat, and could afford to go to school but did not know what sacrifices our parents had to make to provide all those for us. We never knew if they had a money crisis – it was a taboo to speak about it. It was maybe until we started paying our own bills that we realise how hard it could get.
If you are going to bring your child up the same way, how can your child get a grip of the reality of how much they will need to earn in order to keep up with the rising cost of living?
Start with basic things, like the bill at the restaurant when you eat out or utility bills. You can also play a game and let them guess the cost of cars, houses, or clothing. It may be a bit too overwhelming for them but sooner or later they will see the bigger picture and be more prepared when they’re let out into the real world.
If you are guilty of any of the above, it is probably time you change your parenting strategy to raise a generation that is more financially savvy than you were. Your children grow up so quickly that you can miss out on the opportunities to teach them the important things about money. It is crucial to teach your children to understand that although money is important, it is not everything and it does not define who they are.
They also need to learn that everything in life should be achieved for the purpose of self-development and responsibility, rather than looking only at the monetary rewards that they might gain from it. Advocate the right money lessons and they will thank you for it when they start to earn their own cash.
One of the best ways to start educating your child on money management is by opening a junior savings account.
This article was first published in 2014 and has been updated for freshness, accuracy and comprehensiveness.