Parents hurt their children’s finances mainly through what they model: debt, impulse buying, money fights and silence about money teach kids habits that follow them into adult life. Your actions teach your children how to behave with money, and they carry the lesson for life. Live very cheaply and a child may feel there is never enough, then spend quickly once they earn. Live beyond your means and they may grow entitled and dependent.
This list covers 15 mistakes, plus a bonus, with the fix for each. It is the companion to the investment ideas for children: this one is about the habits and choices you pass on.
Watch the full video here, or skip to the breakdown below.
The 15 mistakes at a glance
- Telling them it does not matter what they do, as long as they are happy (1:45)
- Showing them that debt is normal and minimum payments are fine (2:57)
- Modeling a poor work ethic (4:13)
- Encouraging them to take out a student loan (4:54)
- Not opening a bank account for them (5:43)
- Buying them a car (6:29)
- Handing them money whenever they ask (7:33)
- Letting them hear your financial worries (8:18)
- Fighting about money with your partner in front of them (9:15)
- Avoiding conversations about money (10:08)
- Tying all their fun to money (11:11)
- Impulse buying (12:17)
- Giving in to the clothing and makeup epidemic (12:43)
- Teaching them to be polite about money (13:46)
- Buying things just because they are cheap (14:37)
1. Telling them it does not matter what they do, as long as they are happy
Many people remember being pushed into a degree they hated. Those who lived through it vowed to be different, and now a generation of parents sends children out with rose-colored glasses. The reality, as the script puts it, is that passions and dream jobs often pay poorly.
You do not need to push them into misery. Lay out the financial reality of the jobs they like and work toward a middle ground together. Encouraging dreams without explaining the money is like sending someone sailing without teaching them how to sail.
2. Showing them that debt is normal and minimum payments are fine
Today’s level of consumer debt is a fairly recent part of the economy, so the consequences were not fully understood. People now think debt helps credit scores and that minimum payments on time keep you safe.
But have you set a hard line on how much debt is needed for a good score, or how fast to pay it off? Putting daily expenses and fun purchases on a card and telling kids minimums are fine leaves them unprepared for an emergency. Children who see debt as standard see borrowing as free money, and may end up comfortable being in debt forever.
3. Modeling a poor work ethic
Lessons mean nothing if you do not walk the talk. You cannot tell children to save, invest and work hard while you do none of it.
A child who watches you switch jobs monthly, take many sick days and complain about work will link work with unhappiness. They will think jobs are there for a good time, not a long time, when in reality you need both.
4. Encouraging them to take out a student loan
The script admits this one is controversial: letting an 18-year-old borrow for education is a major mistake on the parent’s part. If you could not put away $100 a month in a compound interest account over 18 years to help, how can you expect a teenager to grasp the weight of a huge loan?
Student loans, especially in the US, can keep children poor for most of their adult lives. You do not have to pay for everything, but giving some breathing space means they do not start adult life in crippling debt.
5. Not opening a bank account for them
Too many people open their first account after turning 18. Most banks offer teen checking accounts from around 13 or 15, and some offer accounts for children as young as 6.
An early account teaches interest and budgeting, since they watch money grow. It also builds autonomy and confidence in managing finances.
6. Buying them a car
Parents want to give children the life they never had, and a car is a big milestone. In places that are not walkable, a car is a necessity. In places with good public transport, buying one is unusual.
Wherever you live, avoid creating financial codependency. A car is a step into adulthood, and a child deserves the pride of taking it themselves. Handing it over may ease a burden now but can lead to a lifetime of expecting bailouts. Let them work toward the milestone.
7. Handing them money whenever they ask
Making money is tied to work, and managing it is tied to good decisions. Cash on request teaches neither. Giving $30 when they ask for $50 shows restraint but still ties money to asking.
A better system is a regular, set amount based on work done around the home, built into your budget. If they spend it all at once, that is on them. They need to learn to save for special occasions, and handouts do not teach that.
8. Letting them hear your financial worries
If children see constant stress about money, you hand them a scarcity mindset. They grow up believing money is hard to come by, which limits their thinking and ambition.
They cannot place financial problems in context, and the emotional weight distracts them from school and social development. Worse, they may read money trouble as a reflection of their own worth and feel guilty for costing you. Teach them about problems, but pair each one with a solution you model, and teach them to plan their own safety net.
9. Fighting about money with your partner in front of them
Children learn through observation. If they watch money fights, they learn that money is a source of conflict, not a tool to manage together. Money talks should not carry anger, resentment or fear.
The script cites studies showing that children who saw their parents fight about money are far less likely to discuss or pay attention to it, because they link it with negative emotions. Constant fighting also makes it seem complicated, when managing money is not.
10. Avoiding conversations about money
Protecting children by staying silent backfires. Money is a basic part of daily life, and without conversation they grow up without tools to manage it. Teach realistic expectations, responsibility and the value of hard work, in an open and positive tone.
Swap “We can’t afford anything” for “Let’s do something within our budget and think of something creative this weekend.” The best lessons come from grocery shopping, paying bills or planning a holiday, and planning can be as exciting as the trip.
11. Tying all their fun to money
Vacations, amusement parks, movies and restaurants are costly and best kept for special occasions. If every outing costs money, children learn they must spend to enjoy themselves.
Show them local parks, free library events, home movie nights, crafts and exploring nature. They carry those habits into adulthood, saving better because they can entertain themselves cheaply, and they feel less like they are missing out when they have to make sacrifices.
12. Impulse buying
Buying on a whim shows children that this is a normal way to manage money. They also see that you get happy from material things and may conclude happiness has to be bought.
They need to learn that nothing is affordable at any time and that spending has consequences.
13. Giving in to the clothing and makeup epidemic
The script calls it a buying epidemic, with parents bending too easily to demands. Social media pushes the same sneakers, clothes and makeup, and children tie them to their worth. Buying them confirms the belief that they need these things to fit in.
The people we admire bring something different to the table. They find the group that will stand out with them. Teach children that owning what everyone else owns does not make them more worthy.
14. Teaching them to be polite about money
Money talk feels awkward because it can look like you lack it or worry about it. But that avoidance costs confidence. Children may undervalue their work and accept underpayment, struggle to say no to friends, family or partners who keep asking for money, and hide their real situation.
Talking is how people see whether they are behind and make fixes. They will not do that if you always teach them to stay polite and soft about it.
15. Buying things just because they are cheap
You pick the cheapest shoes because it is what you can afford, and weeks later you are back because they broke. Show your child that good quality lasts longer and gives a better cost per use.
It is better to put a little away each month and afford the good pair than to grab something that will not last, or make one large purchase all at once.
Bonus: not preparing before they are born. Your child’s financial freedom starts with you.
The blueprint starts with you
The bonus point is the root of the list. Before teaching children about money, refine your own financial literacy: learn to make money, invest and reduce expenses, and put yourself in a position where stress does not spill onto them. The script suggests mapping the next two decades on a spreadsheet, a slide deck or a hand-drawn map.
Every decision, habit and word about money forms the blueprint of a child’s financial psyche. If you keep making the mistakes, you cannot expect them to do better.
FAQ
How do parents teach kids a healthy relationship with money?
Model it. The script says children learn more from your behavior than your words, so show saving, calm money talk, regular allowances tied to work and spending that matches your budget.
Should parents tell kids to just follow their passion?
Not without the financial picture. The script says passions and dream jobs often pay poorly, so lay out the financial reality and work toward a middle ground together.
Is it bad to fight about money in front of children?
Yes. It teaches children that money is a source of conflict, and studies cited in the script say these children are less likely to discuss or pay attention to money later.
At what age can a child have a bank account?
The script says most banks offer teen checking accounts from about 13 or 15, and some offer accounts for children as young as 6. Early accounts teach interest and budgeting.
Why should parents avoid buying their child a car?
It can create financial codependency and a habit of expecting bailouts. The script suggests letting them work toward the milestone and feel the accomplishment.
Should I talk to my kids about money worries?
Teach them about money, but not your constant stress. Pair any problem with a solution you model, since worry can give children a scarcity mindset and make them feel guilty.
Keep reading
- 15 Best Books to Teach Kids About Money
- 15 Mistakes Rich People Make That Make Them Miserable
- 10 Habits That Help Rich People Make More Money Than You
