Beth Kobliner is a money and parenting expert and the author of “Get a Financial Life: Personal Finance in Your Twenties and Thirties.”
It's a classic scenario: You give your kid his allowance with the caveat that he won’t be getting more until the following week. The next day he blows it all during a trip to the mall.
Then when he begs and pleads for more money ... you give in.
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Of course, if you saw other parents cracking open their wallets after declaring they wouldn’t give another dime, you’d shake your head.
But for some reason it’s harder to stand your ground when you’re at the negotiating table with your own offspring. Besides, what’s the harm in helping him out?
Habitually slipping your kids an extra $5 here or $20 there adds up to them knowing bubkes (that’s Yiddish for “nothing”) about budgeting. As long as they know that the fountain of you will keep flowing, they won’t learn how to live within their means—or take control of their own financial lives.
The truth is, while our intentions may be good, we all make mistakes—even the most money-evolved parents among us. So how can you avoid passing less-than-perfect financial habits down to your kids?
Start by taking these nine wrong money moves to heart, and strive to instill better habits (and lessons) instead—just in time for back-to-school season.
1. You Give in at the Store
Why It’s the Wrong Move What parent hasn’t said no to Skittles at the register, only to acquiesce when your kid starts screaming? Although you may have squashed the outburst, this flip-flopping actually rewards your kid for bad behavior—and reinforces that all he needs to do is continue to scream to eventually get his way.
“That just leads to escalating tantrums because children learn that you have a breaking point,” says psychologist Denise Cummins, Ph.D., fellow of the Association for Psychological Science. “And make no mistake, they will exploit it.”
The Better Move Distract them. Play a game like "Who can find the cheapest toothpaste or shampoo?" suggests Martin Lindstrom, author of “Buyology: Truth and Lies About Why We Buy." Then work a money lesson into the exercise and explain that whether it’s the fancy brand that costs $12 or the generic for $3, it’s all basically the same stuff.
And hold firm with the No Skittles policy. By playing the game—then skipping the candy—your kids will learn that spending decisions are based on a budget and values, not a whim.
2. You Wait to Talk to Your Kids About Money When They're "Old Enough"
Why It’s the Wrong Move A study from the University of Cambridge shows that kids’ money habits are typically set by age seven. So skip the money chats at an early age, and before you know it, your child is a freshman in college—or an underemployed recent graduate—who has accumulated lots of credit card debt and little-to-no savings.
The Better Move Start talking about money as early as age three. Even preschoolers can learn basic financial concepts, like delayed gratification and making choices, according to research from the University of Wisconsin-Madison.
To put this into practice with your own kids, give your toddler a dollar the next time you're at the grocery store and let her choose whether to buy one orange or two pears. Or when she's on line for the swings at the playground, tell her that sometimes we have to wait our turn for things. Then explain it’s just like waiting and saving up our money to buy something we really want.
Learning to wait is about delaying gratification, and that, in turn, is the foundation of saving.
3. You Set Up a Lemonade Stand—and Do All the Work Yourself
Why It’s the Wrong Move If you’re the one who paints the sign, buys the supplies and lugs the table and chairs, the only lesson your kids learn is the wrong one: Entrepreneurship is easy.
In my book, chores are about being part of the family, and an allowance shouldn't be given for completing tasks your kids should be doing anyway.
The Better Move In this case, when life gives you lemons, make an economics lesson out of it. So let kids do the work themselves, make mistakes and have fun. “You can even offer to let them ‘hire’ you,” says Erin Baehr, a Certified Financial Planner™ based in Stroudsburg, Penn. And help them decide if your labor is worth it.
For example, Baehr says, if a 5-cent cup of lemonade costs 3 cents for the goods, 1 cent for mixing the drink and 1 cent for selling a cup, your child will have to decide whether to do the work herself and pocket the profits—or hire you and raise the price.
4. You Pay Allowance for Basic Chores
Why It’s the Wrong Move In my book, chores are about being part of the family, and an allowance shouldn't be given for completing tasks your kids should be doing anyway. Do you really want to raise children who demand handouts each time they make their beds?
The Better Move Instead of compensating them for everyday chores, pay a flat 50 cents or $1 for every year of age—so a 10-year-old kid would receive $5 to $10 per week in allowance. And only reward them with additional money for true “extras," like tutoring a sibling or doing the whole family’s laundry.
And don't forget to mind the gender gap: A survey by Junior Achievement USA and The Allstate Foundation found that 67% of boys get an allowance compared to only 59% of girls. So make sure that your sons' and daughters' earnings are truly comparable.
5. You Shield Your Kids From Consumer Dissatisfaction
Why It’s the Wrong Move After seeing the movie “Frozen,” a friend’s 6-year-old daughter couldn’t wait for her very own Elsa doll. When she finally got one, she was devastated to discover that the doll’s dress was torn.
Most of us would simply buy her a new doll—but that’s a mistake. “One of the things children need to learn is that life doesn’t always turn out the way we’d like,” Cummins says. If you replace the toy, kids don’t learn to stand up for themselves or their hard-earned money.
The Better Move Take your child back to the store the day after you notice an issue with her purchase. On the way, explain the importance of holding onto the receipt, and rehearse what she will say to the salesperson when asking for an exchange.
Although it takes more time and effort on your part, this will show your kid not only how to speak up for herself, but also the basics of becoming a savvy shopper.
Saving for a goal gave him the responsibility of having his own money, the chance to make choices (like buying one big item over smaller ones) and the patience required to save.
6. You Encourage Saving, but Don't Let Your Kids Reap the Rewards
Why It’s the Wrong Move Every parent is bound to have some absolute nos when it comes to what kids should spend their money on.
But if you’re too strict, you’ll take away the joy that comes from setting a goal and achieving it—and your kid may be so disenchanted that he stops saving entirely.
The Better Move See if you can compromise on both the cost and your concerns.
A mom I know had a no-video-game rule because she wanted to encourage her son to spend time reading instead. But, boy, was he persistent. He begged for a Nintendo 3DS, and was even willing to save his allowance for it.
So they struck a deal: If he agreed to play one hour a day on the weekends only, my friend would pay for half of the $170 game system if he could save for the rest. Sure enough, after five months of dutifully stashing away his allowance, he had the $85 he needed.
Saving for a goal gave him the responsibility of having his own money, the chance to make choices (like buying one big item over smaller ones) and the patience required to save—all of which will help set him on the lifelong savings path.
7. You Let Your Kids Borrow Your Credit Card
Why It’s the Wrong Move According to a new CreditCards.com survey, more than half of young people use plastic over cash—even for purchases totaling less than $5.
“Credit cards don’t hurt the way parting with actual cash does,” Baehr says. So sanctioning this type of spending early on certainly won't do you—or your kids—any favors.
The Better Move Keep kids cash-only to force them to learn hard-stop budgeting.
Call me retro, but when I sent my teenage daughter back-to-school shopping, I only gave her cash to spend. And it worked: When her purchases rang up to $8 more than the amount of money she had in her wallet, there wasn’t any “overdraft protection” to cover the difference, and she had to put back a blouse.
So wait until your kid is in college—junior year, if possible—to introduce a credit card. And be sure to instill this key lesson: You should only charge what you can afford to pay in full each month.
8. You Avoid Talking About Paying for College
Why It’s the Wrong Move Dodging this topic will leave your family with sticker shock and few solutions—unless you get started early. Financial aid guru and Edvisors.com publisher Mark Kantrowitz has estimated that the average class of 2015 grad owes more than $35,000 in student loans. Fortunately, this is a burden we can help prevent.
The Better Move Parents start to sweat when I say this, but we must begin talking about college when kids are in the ninth grade. And it needs to be a serious, brass tacks conversation that covers a few key points: How much will you contribute? How much in loans is your kid willing to take on? What are some schools that could work within your family's budget? (You can use College Scorecard to compare university costs.)
This discussion should be positive—"look at all the great choices!"—and serve to motivate your kid to earn top grades early in high school so she can apply for scholarships later on.
"It is important for kids to appreciate that adults face challenges at work, just as they do at school. But continual griping, with no positive spin, can make kids loathe the very idea of growing up."
9. You Often Gripe About Your Job
Why It’s the Wrong Move Venting about your awful day at the office might help you blow off steam, but it also could be giving your kid a negative view of work.
A University of Michigan study found that parents’ feelings about their own jobs play a vital role in whether their kids see work as a job, a career or a calling. For example, if both parents view their work as a calling, teens are likely to follow suit. Remember that kids are like sponges—they absorb everything.
The Better Move Pay attention to how you talk about your job. Even if you don’t love it, you can probably say that it’s better to have one than the alternative scenario.
“It is important for kids to appreciate that adults face challenges at work, just as they do at school, and that even adults need to vent at times,” Cummins says. “But continual griping, with no positive spin, can make them loathe the very idea of growing up. After all, look what Mom and Dad are going through every day!”
So change your job (if you can) to something you love, or find the thing you love about your current job—and emphasize that.
Bonus tip: If you want a quick cheat-sheet on how to teach kids about finances, check out MoneyAsYouGrow.org, a site that offers parents the 20 things kids need to know about money—broken down by age group.
Kobliner is currently writing a new book, “Make Your Kid a Money Genius (Even If You’re Not),” to be published by Simon & Schuster. She is a member of the President’s Advisory Council on Financial Capability for Young Americans.