Mistake #1: Shopping without a list
This is an invitation to waste money and groceries, and a lot of us don’t need an invitation. It also makes us especially vulnerable to impulse buying. For children, especially, it blurs the line between planned purchases and impulse buys. (And lists in general help people stay organized. Teaching children to use lists can help in many areas of life.)
Mistake #2: Always Using Plastic to Pay
These days using cash to pay for anything seems almost strange, credit or debit card are everywhere.
The problem is many kids don’t equate cards with real money, and assume that just because you have the card you can buy anything you want without limits. You know you have a problem when you tell your kids that you don’t have the money for something, and they respond “Yes you do! You have a card!”
Therefore, it’s important to help your kids connect plastic with real money in a bank account, not a magical money tree that gives them everything they want. Instead of using your card everywhere, use cash when possible to show how it diminishes when you spend it.
Write down your transactions in your checkbook ledger, showing kids how the balance decreases with every purchase. Above all, explain that credit cards are essentially a temporary loan and you have to repay all purchases, with interest.
Mistake #3: Speaking in terms of dollars, not percentages
It’s important for kids to learn that not only is a nickel worth more than four pennies, it’s worth 20 percent more. It’s easy not to care about a penny, but 20 percent seems worth worrying about. And it is. Would they prefer to earn $20 for a chore or just $16? It’s still 20 percent, and it’s worth saving. “The concept is if you get in the habit of taking care of small details (financial choices) the habit and behavior will carry through to larger financial choices,”
Mistake #4: Over-Indulging in things just for convenience sake
Despite what we say, we show them that the gratification today is more valuable to us than the sacrifice involved in saving it for a family vacation.
Mistake #5: Not Letting Kids Make Their Own Decision
Finally, making mistakes is a part of the learning process and you have to let your kids make some mistakes with their money to develop a sense of how to manage it well.
Giving them the opportunity to make their own choices about how and where to spend their money (assuming that they have already saved a portion of it) can be a powerful lesson in consequences and budgeting.
Let them make their own decisions, and talk with them about their choice instead of taking over and doing everything yourself. When they have to work harder, plan and wait to buy something that they really want because they spent all of their money on useless stuff, they’ll learn an important lesson and be more likely to make better decisions in the future.