Children learn what they see. It is a true statement for any kind of behavior including money management. Children’s attitudes toward money and whether or not they will be able to make it work for them as adults has much to do with their parents.
If you are married, think about any differences that there might be between you and your spouse, regarding any issues having to do with money. Is one of you more a saver than a spender? Do you approach investing or debt the same way? Chances are that you may each have different ideas about handling money, and those differences were learned when you were very young and then reinforced throughout your childhoods.
This is why it is so important to model the best money behavior, starting as soon as your children start asking you for things that money can buy. Bad habits seem to be more memorable and harder to break than good ones, so let us first concentrate on the things that you should not be doing in front of your children when it comes to money and money management.
Don’t Argue about Money
Money is the number one subject that married couples argue about, so chances are pretty good that you and your spouse will disagree. Just make sure that you don’t do it in front of the kids. If mom and dad are constantly arguing about money, then money is seen as negative, a source of conflict and stress. This may make kids avoid dealing with money issues when they get older. For example, they may avoid opening the credit card statement or balancing their accounts.
Don’t Use Credit Cards
Kids, especially young ones need to see the physical money change hands when a purchase is made. Credit cards and even checks can be a little too abstract, leading to the impression that there is an unlimited fountain of money at the bank. Ask any child under seven where to get money or where money comes from and the answer probably won’t be by earning it in a job but instead by going to the ATM or the bank.
Don’t Use a Piggy Bank or Change Collector
What could be so wrong about a piggy bank? After all, shouldn’t that teach our children to save? A piggy bank has two negatives going for it. One, most piggy banks are opaque. Young children may not trust that the money is in there, if they don’t see it, plus it is hard to tell if there is more money in the back then there was before.
The traditional piggy bank also limits you to one pool of savings. It doesn’t teach anything about making choices with money. Three slots, sections or individual see-though banks can earmark money for saving, spending, and tithing (or donation). Older children would benefit from seeing a fourth slot–investing.