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Are you Setting a Bad Financial Example for Your Kids? 5 Questions to Ask Yourself

making smart financial decisions for your children



Most parents hope to impart a certain level of financial intelligence to their children. It is one of the most valuable life skills you can pass on to your kids. Telling them is one thing – but what are you showing them? What actions are you modelling? Ask yourself the 5 questions below to work out if you are setting a bad financial example for your kids. You can find more about how to pass on good money habits from organizations like Debt Rescue.

Are You Competitive?

On the face of it a little competition among peers is a good thing; it motivates you to try harder, be better, achieve your best; but how are you demonstrating your competitive streak to your children? Are you seeing if you can save more this month than last month, or this time last year? Or are you stuck on getting a car that drives your mates wild with envy? See the difference?

Do You Have – And Do You Enforce – Financial Boundaries?

Saying ‘Yes’ to everything is a habit most adults break out of necessity, but it’s easy to avoid passing this very important message on to your children. Teach them a few limits when it comes to money and finances – let them see you pick a cheaper brand, or dine in instead of splashing out because it’s the better economic decision. If they’re old enough to understand, explain why putting your hand in your pocket for every little thing is a poor decision making system for financial soundness. Most importantly, teach them to choose that, if they want ‘A’ they may have to give up ’B’. After all, this is a lesson that will serve them well across their whole life.

Do You Offer Constant Entertainment?

In this age of portable entertainment devices, it often seems that children are part robot. They are all after the latest device – which will be obsolete inside of a year – and the question of whether or not they really need to be plugged out of reality almost all the time is often glossed over as ‘irrelevant’; after all, isn’t everybody doing it? Are you? Can your children think of free ways to entertain themselves? Can you demonstrate this for them with your own behavior? Can you show them DVD classics from the library that cost you nothing, rather than downloading the latest new releases?

Do You Dismiss Your Budget In Front Of Them?

When something blows out the budget, how do you react? Do you check your financial planand find another place to make up the shortfall? Or do you shrug and dismiss it with a wave of your hand, saying ‘it’s just this once’; but is it? What are your kids learning about the importance of your financial plan here?

Do Your Children See You Relying On Your Credit Cards A Lot?

Most children witness parents whipping out the plastic – but do they really understand what it means? If your children are old enough, make sure you explain how credit cards work, and what part they play in your household finances. If you pay your bill down to zero each month, ensure they know this – and that they understand why. Explain the dangers of using money that isn’t really ‘there’, and how a bad credit rating can affect them for life. Being scared of credit card debt is a much more useful life lesson than worrying about cross dressing wolves in the woods.

It’s important to be conscious of the financial example you model for your children. If you’re demonstrating a poor financial example, it’s likely they will learn this too. If you need any more motivation to smarten up your money habits, this ought to do it. What’s your worst financial habit that you’d hate to see your children pick up from you? How can you avert this? Share your thoughts in the comments box below.


Image: Freedigitalphotos.com/photostock

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

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