How your money habits impacts your child's well being

"Pleeeeese Mummy" , "I want it! Now!", "That's not fair! my friend's mum gave it to her!". 

Sounds familiar? 

Do those words make you cringe?  How many times have you given in just to stop hearing those words or worse not to feel less wealthy than the other parent whose spending ability has no limit? 

Giving in to your child for every request they have is the worst form of financial modeling. 

It teaches your child a few rather unfortunate things  

1) That whining, pleading and behaving badly are actually rewarded.

2) That your word means nothing.  This is because you did say "No" and then acquiescent to a yes.  

3) That you can't be in your budget.  How many times have we said "I don't have money" only to eventually agree and buy the item.  If you "don't have money", then how did you find the money to pay for this yet again.  That it's ok to be undisciplined about finances and live outside your declared means. 

BUT!! SHE WAS THROWING A TANTRUM! IN P-U-B-L-I-C!

I get it.  But you need to change your approach so that she actually gets a win when it comes to learning.

TREAT MONEY REQUESTS FROM A CHILD THE SAME YOU WOULD FROM AN EMPLOYEE / BUSINESS CONTACT

When parents ask me how to manage money issues with their children, I ask them to consider their child no different than they would an employee.  

1) Ask your child to make a proposal / plan or budget for the money they want. If your employee wants to put in a request to buy something they would need to create some kind of a proposal, budget or plan.  It's never to early to implement the same with your child.  If they want something, let them document what they want and why they want it, and how it will help them.  Simply buying something because their friend has it, is not an acceptable reason. 

Implement this early enough and kids get used to analyzing their spend, acknowledging their own needs and developing a sense of  sensible spending that stays with them for life.  

2) Stick to your word.  I tell parents all the time to think before they say Yes or No to a child purchasing something.  There is such a definite correlation between these words and what your child learns from them.  If you don't know and just want to think about it, say "I'll think about it".  Do not default to "No" because this teaches them that the word "No" has no value. It has repercussions downwards.  Fast forward a few years and when your now grown child has no money, instead of just walking away from a purchase, their monetary role model (you) kicks in and they go ahead and buy it.  

Almost every parent of my friend, defaulted to No when asked for something, and I can tell you that most of my friends have no idea how to stop themselves when they go shopping.  This is not a trend you want to encourage. 

3) If you say you have no money - then don't spend it!  This is a critical lesson to teach your child.  Respect money.  If you don't have it - don't use it.  And if you have said you don't have it - then you also cannot use it. Ever wondered how so many kids end up in debt even after they have acknowledged they have "no money".  It starts from what they saw their parents doing so many years ago. 

A better way of dealing with this, is just to say "I don't want to spend money on that" - it's honest, teaches your child that you are making choices and that this isn't an investment you want to make.  

Modeling good financial behavior is so important to kinds.  They will grow up to practice not only what they learn but also what they see. 

Check out our Adult Program on Money Management

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