Big money mistakes with kids

Mother and daughter at retail checkout

Avoid these common money mistakes with children to teach them life skills and help them become money savvy.

Teach kids life skills

We all want to be good parents. But when it comes to money matters, we may be falling short. The good news is that we can change our behavior and teach our kids the life skills and values they'll need to live in the real world.

Big mistake #1 is believing your kids must have what other kids have

Are you buying your kids too much stuff so they can keep up with the Joneses? That may be a buying trap you don't want to step into.

The solution?

Don't buy too much stuff. Stop overindulging your kids. Expensive things don't make them better people, and you may be sending the wrong messages. Set spending limits on holiday and birthday gifts and clearly articulate the rules.

Big mistake #2 is shielding your kids from the cost of things

If money issues are never discussed above a whisper when the kids are around, your children will have a tough time grasping financial realities. You don't want their peers to teach them to become money savvy; you want to be their teacher.

The solution?

Don't avoid talking about money. Make your world your classroom and get even the young ones involved in daily money matters. For instance, when you're at a restaurant, rather than hiding the check, show it to the kids. Let them figure out if the charges are correct and teach them to calculate the tip. Start to show your kids some of your expenses, such as the utility bills. Challenge them to come up with savings ideas, and split the money you save.

Big mistake #3 is using credit cards to buy stuff for your kids when you know you shouldn't

When you spend money you don't have, you send the message that you can buy things without worrying about how to pay for them. Is that really a message you want to send?

The solution?

Be transparent. Kids will test the limits by asking for things. Your job is to set those limits. Don't go into debt to buy everything your kids want. Tell them you have a budget that may not include all their wants, and suggest that they can earn extra money to buy things themselves.

Big mistake #4 is spending money on your kids and hiding it from your partner

Most of us, for one reason or another, grew up being secretive about money. Unfortunately, this creates a real value disconnect.

The solution?

Be honest. You don't want to teach your kids lessons in deception. Avoid saying, "I'll buy this for you, but don't tell your father/mother."

Big mistake #5 is giving your kids money every time they ask

Do your kids constantly hit you up for $10 here and $10 there? If you or your partner gives in, this drip, drip, drip of money can happen without you even noticing.

The solution?

Just say no. It's not pleasant to say no, and you may face whining, but it's real life. There isn't a Money Fairy who keeps doling out the dough. It's best that your kids find this out early.