It is normal to want your kids to emulate yourself in so many ways. It is also normal to want them to avoid a few costly mistakes you may have made as you grew up. Financial freedom is just one of the many things you may want your children to emulate if at all, you are successful. Accumulating debt, on the other hand, is one plague you will want your children to avoid at all costs. You will teach them what bankruptcy is at a very early age and what it takes to avoid it. But that won’t be enough.
In fact, it may never work and your desire to have children that are financially independent may go down the drain. This is of course, not good news. But it happens every day mainly because parents unknowingly pass on bad money management bits to their children. Teach your kids all there is into money, bankruptcy and how to deal with debt. But watch out your habits. They can easily teach your children bad money and debt management issues.
The budget doesn’t matter
Kids always learn about money from their parents. They later learn more from their friends. The first lessons they learned from their parents often remain more relevant to kids than what they learn from their friends. To that extent, you will want to ensure your kids have good friends. You will then teach your children how to budget and spend money.
But what can happen when you teach your children all these lessons yet go on to buy what you can’t afford? What will eventually happen when your children observe how often you impulse buy items you hardly need? They will certainly learn that the budget doesn’t matter. That is fine to spend more than what you have saved or exceed their budget to acquire items they don’t need. So teach your kids how dangerous it is to disregard their budget and how one can easily go into bad debt because of ignoring their budget.
You should get what your friends get
Children will always want to fit in and have what their friends have. You can, however, tame this habit before it even crops up. Don’t buy your children’s toys and other material possessions simply because you want them to fit in. Do it but do it in moderation. Allowing your children to compare themselves with others is tantamount to teaching them that there is nothing wrong with getting in debt or overspending all in the name of pleasing others. Talk to your kids that negative financial freedom like that can make them poor. Insist on them that lasting relationships are not built on what each person has and that one can’t buy his way into a genuine friendship.
Entertainment is a priority need
Of course, you want your children to have a memorable and fun childhood. Take them out every weekend if possible. Enroll them in summer camps. But do all these things in moderation. Refrain from them after a while even if you have the money. Then teach your children that sometimes you have to forego entertainment and save for the sake of a better tomorrow. Give them options sometimes – to go have fun or save the money that would have otherwise been spent on the fun activity. If your children grow up needing to be entertained ever so often, they can easily carry that habit into adulthood.
No is a bad answer
The number of times you tell your kid no after he or she asks for can have a lasting impact on the kid’s money management skills in the future. If the answer on the hand is always ‘Yes son, have it’ then you risk having your kid depending on you for a long time to come. That of course, can be detrimental to your efforts to have your child learn financial independence at an early age. Tell them no every once in a while. It leaves them with a good money management lesson.
Debt is a normal thing
It is normal for parents to speak about debt as a normal thing as their children hear. Some crack jokes over it. This may seem harmless but it is not. Your children will grow up without any fear of debt. Speak of debt in your household as one of the worst things one can ever put up with. Then speak of the same in the light of how easy it is to avoid it and what one can do if it ever catches up with him or her. Do this on a regular basis. That way, your kid will learn all they have about debt. They will also learn that dealing with debt is possible.
A credit card is a wonder tool
Never use your credit card too frequently with your children watching or speak of the number of credit cards you have as they hear. Credit card use is one of the main reasons why people live with debt. They can be good financial tools, but only when they learn when and how to use them.