I’ve talked about the importance of being a good financial role model previously. Our kids are always observing us and mimic our behavior, including how we handle and think about money. Even if you are not actively teaching them about money, they are still learning. Today, I’d like to specifically focus on some common money phrases we use with our kids that we need to avoid.
Over my 20 years as a financial advisor, I’ve witnessed how childhood observations and beliefs have influenced my clients. Many of these beliefs and habits originated from their parents and were unintentionally passed along. My clients took these lessons to heart, believed them and passed them along to their kids.
Phrases to Avoid When Talking about Money to Kids
We, as a parents, need to be conscious of how we speak to our kids about money and the emotions behind our words. We may be instilling habits and beliefs that are untrue and negatively influence their relationship with money.
We Can’t Afford It
We’ve all been there: our kids are begging us to buy them a new toy, which they don’t need, so we use the old standby, “We can’t afford it.” While that may be true in some instances, the more honest answer may be that they don’t need a new toy. Those four simple words—”We can’t afford it”—may seem harmless to you, but to a young child, they can be incredibly scary.
Young kids in particular can be very literal. Your “We can’t afford it” has planted a seed of fear within them. They now believe money is scarce and begin to worry.
1. Maybe you really can’t afford the toy. Or food. Or your home. Soon you’ll be homeless.
2. You say you can’t afford it, but you still spend money. Now you are a liar.
From this, some kids will believe that money is scarce and something that causes worry, fear and makes grown-ups lie. It’s highly unlikely that was any parent’s intent so what is the better answer because buying your children everything they want is not the right answer either.
When my girls find something they want and ask me to buy it for them. I remind them of our family goal and my choice to honor that goal because our family vacation is so important to me and to them. I explain how unplanned and unneeded items affect our ability to achieve our goal. They can choose whether they want to use their money to buy the toy. More often than not, they decide it’s not worth their money (and delaying their own goal achievement) and walk away without feeling deprived.
Credit Cards Are Bad and You Shouldn’t Use Them
I’ve seen parents simply tell kids credit cards are bad and to avoid using them, rather them teach them how to use them wisely. The problem is your kids are going to see many people, including loved ones, use credit cards. Suddenly, Grandpa and Grandma are bad people for using them. Or they see you use them. Once again, you are telling them to not do something that you do, leaving them confused.
People may abuse the privilege credit cards offer but that does not make them bad—the credit card or the person. The more important lesson is to teach our kids that credit cards are not free money and to not use them to extend their lifestyle, which is a common mistake. To show our kids how to use them responsibly and to our advantage.
I Work Hard/Had a Bad Day and Earned This
After a bad day, we may soothe our hurts by treating ourselves to something. For some of us that means spending money on things we want, but don’t necessary need and may not really be able to afford. Sometimes our kids are with us when justify these purchases and we tell them, “We earned this.”
Kids assume this is an acceptable response and begin to reward bad and good days with things they want because they believe they “earned” it. When we feel the need to rationalize a purchase, it’s generally because we know deep down that we shouldn’t have bought it in the first place. It’s a dangerous habit to form and one we don’t want to demonstrate to our kids.
I want my girls to correlate hard work with earning money for the things that truly make them happy. I demonstrate this to my girls by setting goals and honoring them. I tell them when I’ve had a bad a day and feel tempted to buy something to make myself feel better. Then I also tell them why I don’t—my goals mean more to me and tomorrow I will most likely regret that purchase, which will make me feel even worse. And if I find out tomorrow that I still want that item, then I’ll save for it and make a conscious decision to buy it, rather than buy it out of anger, frustration, loneliness, boredom etc.
What have you been told or told your kids about money that you regret?
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