As spring approaches, it’s a time of renewal and fresh beginnings. Just as nature prepares for a new season, parents should also consider how they can prepare their children for the future—especially when it comes to financial literacy. One of the most common desires among parents is to give their children what they themselves never had. However, without careful planning, this well-intentioned goal can lead to unintended consequences. Let’s explore the three biggest mistakes parents make when teaching their children about money, and how to avoid them.
1. No Deliberate Plan for Financial Education
The first mistake many parents make is not having a deliberate plan to teach their children about money. Financial literacy isn’t something that should be left to chance or introduced in the later years of adolescence. According to experts, the ideal time to start teaching children about money is when they are around six years old.
Why six? At this age, children are beginning to learn numeracy and literacy in school, making it the perfect time to introduce financial literacy at home. Parents should focus on building habits and structure early on, using everyday opportunities to teach children the value of money, saving, and even basic concepts related to property investment. There are plenty of tools and resources available to help parents navigate this important task.
2. Paying for Everything, Letting Them Spend Freely
The second mistake is covering all of your child’s expenses while allowing them to spend their own money freely. This practice can lead to low financial awareness. When children are not responsible for any of their costs, they miss out on understanding the real-life expenses they will eventually have to manage on their own.
Take, for example, a 16-year-old apprentice carpenter who is blessed enough to have all his life expenses covered by his parents. While this might seem like a privilege, it comes with the responsibility of saving a significant portion of his income. In this case, the child is required to save a minimum of 85% of his income, with an additional portion allocated for tithing. This approach ensures that he learns the value of money and the importance of saving for the future.
If parents cover all costs and allow children to spend freely, they run the risk of raising financially unaware adults who struggle to accumulate wealth and manage their finances effectively.
3. Rescuing Children from Their Financial Mistakes
The third common mistake is rescuing children from the consequences of their poor financial decisions. While it may come from a place of love and a desire to protect, constantly bailing out children can create low financial accountability.
It takes courage to let children face the consequences of their mistakes, but it’s a necessary step in teaching them valuable life lessons. When parents always step in to fix their children’s financial blunders, they inadvertently teach them that there are no real repercussions for their actions. This can lead to a lifetime of financial dependency.
In contrast, allowing children to learn from their mistakes while they are young can have positive, long-term effects. These lessons will stay with them throughout their lives, helping them to become financially responsible adults.
The Importance of Teaching Financial Responsibility
At the end of the day, every parent wants to see their children succeed. However, it’s essential to strike a balance between providing support and fostering independence. By avoiding these three common mistakes—failing to plan for financial education, paying for everything without teaching financial awareness, and rescuing children from their financial mistakes—parents can help their children develop the skills they need to manage their finances effectively.
Remember, the goal isn’t just to raise children who are financially comfortable, but to raise adults who are financially responsible, independent, and capable of making sound financial decisions. At Teach Me About Property, we created a simple eBook for parents to prepare their young ones, we call it TMAP for Kids, which will soon be available on our products page. And if you’re looking for more strategies to implement these lessons, we’re more than happy to discuss. Let’s keep the conversation going.
