Helping your kids develop a healthy relationship with money is one of the most important things you can do for them. But let's face it — financial topics can be complicated, even for adults. That's why it's important to send the right messages and provide a strong foundation for your kids' financial habits.
You can pass on smart financial habits by avoiding these common mistakes parents make when teaching kids about money.
Money talk is just for grown-ups
While you want to teach your child that it's not polite to ask people how much money they make or how much they paid for something, inside your home you should try to be more open. If money is treated as a taboo topic, kids will put off caring about it. Make a plan with other adults in your household on how to teach kids about money, and stick to it.
Always making money a negative topic
Being open about money is good, but not if it's always represented in a negative way. Saying things like “we're broke," or blaming money woes on other factors can give children the impression that money is the root of “evil," or causes all problems. Along those lines, bickering with your partner about spending or hiding purchases from a spouse are negative behaviors that can leave a lasting impression.
Missing out on teachable moments
When it comes to money management for kids, recognize the learning opportunities all around you. In the grocery store, explain why you chose one item over another, or how you planned your weekly menu around what was on sale. For older kids, show them the family cell phone bill then break down how many hours you have to work to pay for it. Celebrate financial wins, too, whether it's how you saved $10 at the grocery store using digital coupons or applied credit card rewards toward your vacation.
Always saying yes
Delayed gratification is a foreign concept with most things these days, but try not to give in when it comes to spending. It's OK to have kids save up their allowance for something (or show them how you did just that). Discuss how some spending choices might involve sacrifices in other areas. Related to that should be an explanation about wants vs needs.
It's important for kids to see money as a tool that provides access to the things your family needs, and allows them to have some of the things they want. Break it all down for them with examples from your budget.
Ignoring your kids' money personalities
Be open to each kid's learning style to help money lessons stick. For instance, one child may like using physical "save, spend, and give" jars, while another might get more from using a money app aimed at kids like GoHenry.
Putting off credit conversations
Don't wait until your kids are going off to college to broach the subject of credit. Even young children can grasp how borrowing and interest works, and that there are consequences to not paying bills on time. Along with that, share why maintaining good credit is important, and how to do it.
A great analogy to use: Compare a school report card to a credit score. Illustrate how financial behaviors are graded, and how better grades can help them get the things they'll want in the future, from a car loan to an apartment.
Teaching kids about money takes effort, but avoiding the common money mistakes above is half the battle. Modeling healthy habits, keeping communication open, and giving your children opportunities to practice managing money can take you the rest of the way.
What are your tips for talking to kids about money? Share you thoughts on Twitter or Facebook @gohenry with #letstalkmoney.