The biggest money mistakes parents make with their children

If you’re like many parents, you don’t want to burden your children with financial concerns.

But it is important they gain money experience so they can effectively manage their finances once they leave home.

So here are three mistakes you should try to avoid:

1. Not talking about money

Money is central to our lives, from the jobs we take to the cars we drive. So if you don't talk to your children about money, they won't understand how their choices will impact their wealth and life outcomes.

Talking to your children about the family finances will help them learn valuable financial skills such as how to budget, which expenses must be paid first and what discretionary spending is.

But you should do more than just talk. You should involve them in the process so they learn to manage money from an early age. For example, if you have a certain amount of money to spend on leisure activities, ask them for suggestions on how to spend it. That will force them to consider the merits and value of each option, and to then choose an activity within their budget.

If you have multiple children, there will probably be disagreements, which will help them learn how to negotiate and compromise.

Another way to involve your children is to fully explain your actions. For example, instead of just saying no when a child asks for an expensive box of cereal, explain to them that the plain box of cereal has similar content, is cheaper and that by choosing lower-priced options you have more money to spend on other things.

2. Freely giving them an allowance

If you automatically give your children an allowance, you teach them to expect something for free. But if you link their allowances to chores, they become accustomed to working for their money instead.

So pay them for being diligent about their school work, keeping their rooms tidy and doing other chores around the house.

You can also negotiate with them. For example, if you’re taking your dog to be groomed, you might tell your children the grooming will cost a certain amount – and that you’ll pay that fee to them if they’re willing to groom the dog themselves.

3. Giving them everything they ask for

If your children have everything handed to them on a platter, they won’t learn vital skills like resilience and hard work, which could cost them later in life.

You also make it hard for them to leave home – because they may face a significant drop in their lifestyles when they move out. This means you create an incentive for them to stay dependent on you.

Teach your child to set a target and save for it with our FLX finance app. If you’d like to learn more about FLX, head here.

This is general advice. Read the PDSs & TMDs at before deciding if FLX is right for you. The FLX Services & Flexischools are provided by InLoop Pty Ltd ABN 27 114 508 771 AFSL 471558 (trading as Flexischools). The FLX Prepaid Mastercard is issued by EML Payment Solutions Limited ABN 30 131 436 532 AFSL 404131 pursuant to license by Mastercard Asia/Pacific Pte. Ltd.


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