Mistakes Parents Make While Educating Children About Money

As parents, we wish to teach our kids about certain life responsibilities at a certain age. Teaching them about money management is one such thing. We wait until our children are in their teens before we start talking about financial habits as well as responsibilities. However, have you ever thought that financial management is a process and educating your kids on money management must start early? 

It is true that trying to teach a six- or seven-year-old kid the benefits of sound financial management can seem like a time-taking effort. But this effort is worth it because the sooner they learn to save before they spend, the better off they will be. 

On the contrary, as you look for moments to talk and educate your kids about the value of money, watch out for the following bad habits that may leave your child confused. So, what are they? 

Do not avoid discussing money with them

Like you teach your kids about facts of life or good and bad habits, why not teach them financial lessons as well? Talking about money with kids must not take a backseat. It is agreeable that a six-year-old kid may not be able to understand in-depth money matters or differentiate values between Rs 10 and Rs1000. However, it is also true that children are incredibly perceptive. They watch you when you pay for something using a debit or credit card, thereby grasping how you spend money and where. So, convert these moments to teach them key money lessons. Educating kids about financial responsibility must begin at home and this should start when they are young. Striking conversations with them relating to money will also help you to understand how much they know about earning, spending, saving, and donating.

Do not assume they will learn it on their own

At home or outside, your children may have heard these terms such as online payment, credit or debit card, budget, saving. When they accompany you to a mall, they see you using a card to make a payment. However, they may not be aware of what exactly is happening or the meaning of these terms. But assuming that they will develop an understanding of the same on their own or waiting till they grow up to take up financial responsibility, is not the right approach. Also, leaving them to figure out money management on their own increases the likelihood that they may wind up with a few bad habits too. Hence, financial responsibility requires discipline, and discipline rarely develops without focused, intentional effort. So, it becomes imperative to start instilling financial habits such as budgeting and saving in them from a young age. You can also teach them how credit card debt works even before they reach the legal age to own a credit card.

Avoid instant gratification

Our children are living in a world of instant gratification. If you constantly fulfill their wishes, children may have expectations that they will get what they want without any effort or responsibility. Therefore, it becomes fundamentally important to explain to them the value of saving money. Plus, developing an understanding to differentiate between wants and needs is also necessary. For example, you can give them a list of things and ask them to categorise the items into two different sections i.e. want or need. Having knowledge about where and how to spend as well as savings at a growing age, will help them learn to manage their money in a better way in the future.

Controlling all their spending

When it comes to your kid’s financial choices, it may be helpful to give them a little freedom too, but of course, within reason. If you micromanage every spending decision your kids ever make, they will never learn to think for themselves. We know that lasting lessons are learned through tough situations and hence, it is essential to give them that freedom to experience the good and bad of financial choices. 

In conclusion, correcting even a few of these mistakes can be critical to shaping how your children will feel and behave around money as they become young adults. By sharing and learning with your kids today, you are making an investment in their future financial well-being.

The author is Co-Founder, Junio

DISCLAIMER: Views expressed are the authors' own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.