For many of us, money seems like a grown-up topic that we can put off until our kids are, well, grown-ups.
When they see us arguing about money, we tell them it isn't a big deal. When they ask for something, we try to get it for them—without mentioning how much it will cost. It's easy to send messages that confuse our kids, but it doesn't have to be this way.
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In my work as president and C.E.O. of GreenStreet Commons, a company that makes educational money apps for kids, and as the author of 26 books on financial literacy, there are very few money mistakes I haven't seen.
Below, read the stories of five families struggling with all-too-common kids' money lessons ... and how they can turn their mistakes around.
1. Trying to Keep Up With the Neighbors
Robin*, 42, mother of Kaylee, 15, and Maya, 12, New York City
Robin Says: My daughter, Kaylee, is turning 16 in a few months, so now is the time to plan her Sweet Sixteen party. She's been to several parties already—very elaborate affairs. One party was held in a private room at the Museum of Modern Art, and another was held at her friend's family's summer home in the Hamptons. My daughter doesn't want a party of her own, because she thinks those parties were more about the parents than the kids.
I'm afraid that her friends are going to ostracize her for being the only one not to have a party. I know it's her choice, but I don't want her to regret her decision later. I'm disappointed because I wanted our family and friends to see what a beautiful young woman she has become.
Neale Says: I think Robin's worries are misplaced. Kaylee's birthday should be about honoring her, not to impress anyone or show her daughter off to family and friends. I'm proud of her daughter for taking a stand. If her friends are true, they will not judge her for not having a party, and your family should already be aware of your daughter being a beautiful young woman, without putting her on display. If you really want to be financially smart about this, I suggest you put the money you would have spent on the party into Kaylee's college fund.
2. Shielding Your Kids From Price Tags
Marko, 34, father of Jorge, 11, San Jose, Calif.
Marko says: Growing up, my parents never talked about money with us. When I asked for something—a new bike, for example—they never said, “We can't afford it.” They always said, “You don't need it,” or “What's wrong with your old bike?”
When I went out on my own, I was overwhelmed at how much things like insurance, taxes and electricity cost. It made me appreciate my folks even more for what they gave us, but I wish they had explained things. Now my son is is 11, and when he wants a new bike, I want to explain how long I have to work to make that money—but my wife wants to shield him from money talk. I don't want my kid to think I'm mean, but I also want him to be prepared to live on his own when the time comes.
Neale Says: Marko is right—shielding your child from the cost of things can keep him from getting a good start of his own when the time comes. Anything that involves money, and exchange of value, can be used as a learning tool. For instance, if he and his wife take their son out to dinner, they could show him the check and explain the tax and tip. Even for younger kids, looking at the check is a math lesson.
3. Using Cards Without Explaining How They Work
Melanie, 33, mother of Chloe, 8, and Zoe, 6, Cherry Hill, N.J.
Melanie Says: I use my debit card for groceries, gas, etc. Recently, my kids were playing a popular board game with fake money and I overheard them talking: “This game is really old! They don't give you one of those plastic cards like Mommy and Daddy have.”
Then the girls wanted a swing set for the backyard, and when I explained that it was expensive and we couldn't afford it, Zoe said that I should just pay for it with “that card.” “You can afford anything!” she added. Now what?!
Neale Says: Credit and debit cards can cause “Magic Piece of Plastic Syndrome.” Our kids hear us say, “Oh, I don't have any money, I'll use my credit card.” Worse yet, they just see us pull it out of our wallets and use this piece of plastic without saying a word. The message you are sending to your kids is that you can buy things without worrying about paying for them, and this is just about the worst message a parent can send. Make sure your kids understand that a bill comes at the end of the month and you have to pay it, and that a debit card uses the money that you have put into the account. Explain that the money is not limitless and certainly not “magic.”
Credit and debit cards can cause “Magic Piece of Plastic Syndrome.” Our kids hear us say, “Oh, I don't have any money, I'll use my credit card.”
4. Keeping Spending Secrets From Your Spouse
Scott, 41, father of Sally Ann, 15, Alexandria, La.
Scott Says: My wife's hobby is shopping, and we fight about her spending. Last month I noticed she had a new checkbook cover, but when I asked her about it, she lied and said it was one she'd had for a while. My daughter walked in and I noticed her looking guilty, like she was trying to avoid us.
The next day I got my daughter by herself and I asked her about the checkbook cover. It took some coaxing, but she finally admitted that she was with her mother at the mall when she bought it. She went on to say that my wife had asked her not to tell me, and that she could pick something out for herself for keeping the secret.
Neale Says: Part of this problem is that most of us grow up being secretive about money. The other part relates back to value disconnect. We think, “If I can hide it, it didn't really happen!”
You and your wife need to have a discussion. I'm sure your wife doesn't want to teach your daughter to be deceptive, nor does she mean to put her in the position of conspiring with one parent against the other. If you're not transparent with your spending and finances, you can spiral into debt—and you are teaching your kids the wrong lesson, not to mention being dishonest with each other. While telling money fibs is common—experts call it financial infidelity—it can not only damage your daughter but impact how much you trust each other.
To get transparency back in your money, begin by setting up budgets as a family—for your household, for your wife, for yourself and for your daughter. Discuss them, agree on them, stick to them and review them together.
5. Letting Money Drip Away
Chandra, 48, mother of Laura, 14, Framingham, Mass.
Chandra Says: My daughter Laura is in high school, and I'm going broke. She gets an allowance, but it seems like every time I turn around there's something else at school that she needs money for—extra cash for movies and snacks, a favorite football team sweatshirt or a mani-pedi (because all her friends get one once a week). Where is my money going?
Neale Says: It’s the drip, drip, drip method of money management—not a good habit to get into. Keep a log of every dollar that leaves your pocket for a few weeks (the LearnVest Money Center can help with that), including cash you hand to your daughter. I bet you'll be shocked at how much money you actually fork over to your kid! When you analyze your log, be sure to look for patterns (for instance, does she ask for more at the beginning of the month? Before weekends?), and consider putting your daughter on a limited "commission," like this mom did.
*Names have been changed.