Personal Finance

Top 5 Money Mistakes Parents Can Make

All of you parents out there know that there are several talks that are always difficult have with your children, and trust me – a serious talk about money is no different.

Deciding how and when to talk about money with your children can be very tricky - but I have some great advice for you. Below are the top five mistakes that parents make when addressing financial matters with their kids. These are the things I want you to avoid:

Mistake #1: Not talking about money at all! Trying to shield your kids from money-talk—whether it's because you want to spare them the drama, think that they can't understand it, or will gossip about your finances—will only deprive them of a vital part of growing up. Get them into the conversation. Use the news as a launch point and pay close attention to their questions about what's going on in the news and in your own family. If you don't know the answer, research it together. Communication is key - get them to realize that they play a part in your family's finances.

Mistake #3: Not practicing what you preach.
Kids are smart. They know when you're saying something that you don't practice yourself. If you say that debt is bad, but your kids hear and see you arguing or stressing about paying credit card bills while you continue to use plastic, they get a different message. Your actions when it comes to money speak louder than your words. Be cognizant of what you do with your money in front of your kids, especially the power of teaching lessons in practice.

Mistake #4: Bypassing opportunities to teach. Every time you shop together, whether it's groceries or clothes for school, or pay the bills, you have an opportunity to teach them about money. Show them how price per ounce works; how percentage discounts work (20% off of 60 is...); how to shop within a budget (put something back if you're over budget); and review the demands on your family budget when you're paying the bills. The best, deepest, learning experiences for me when I was a kid were when my mom or dad illustrated money-lessons day-to-day, in practice. And don't forget TV time. Especially now, there are many lessons about money and values with shows like "Gossip Girl."

Mistake #5: Not pointing out marketing. Let kids know when they're being marketed to or advertised to—this helps them make sound financial decisions and teaches them the difference between needs and wants. My dad always made a point of pointing out what was an ad, and what was a service. Ads make other people money and present mostly 'wants', services that you choose satisfy your 'needs'. Again, TV is a great tool in teaching about marketing. Nothing like bringing up a savvy consumer!