Money Mistakes Parents Unwittingly Teach Their Kids

No matter how good a game parents talk to their kids, it’s their actions and inactions that leave the most impact. This is especially true regarding money. Parents can pass on poor financial habits to their kids just as definitively as they did their genes.

GoBankingRates identifies some lessons parents should be careful to avoid teaching the next generation:

* Using credit to get everything you want. It’s tough for parents to teach their kids the virtues of living within their means if they pull out the plastic to indulge their whims.

* Equating happiness with things. When kids see you glowing over a new purchase, they’ll equate joy with new stuff. What they may not understand is that the rush is fleeting.

* Winging it rather than budgeting. Some parents struggle to find ways to tell to kids why they won’t buy them this or that, neglecting the easiest explanation: “It’s not in the budget.” The lesson of setting a framework and sticking to it is invaluable.

5 Bad Financial Habits You Could Be Teaching Your Kids [GoBankingRates]

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  1. lonestarbl says:

    Add: “Not explaining the cost of college” to that list

    • TuxthePenguin says:

      Bingo.

    • Cicadymn says:

      HEY

      My $50,000 masters degree in ancient Aztec mud baskets was totally worth it! Who cares if I’m in perpetual debt for the rest of my life!

    • u1itn0w2day says:

      Parents tend to advocate a career like a doctor, lawyer, executive etc when in fact they should be pushing employability, a modern day survival skill. They also need to push practical skills so that means they should not be upset if they take some shop or want to go to school for a trade. Alot of parents are niave about college because decades if not centuries ago that was about the only way to a better life.

      • corridor7f says:

        Agreed. I think everyone should take a few years off after they graduate high school to get a real taste of what employment is all about.

  2. AlteredBeast (blaming the OP one article at a time.) says:

    The other day, my mom said something about how using a particular credit card got her 5% back. A card that she doesn’t pay in full each month (just minimum). I pointed out that her interest rate is more than 5%. Somehow she didn’t realize this.

    • dush says:

      The people who pay off their card each month and actually get 5% back on their purchases thank your mother.

    • Necoras says:

      I’ll bet you that 5% is only on the first $500 (or some other relatively small number) spent per month. High “cash back” cards are almost always just a gimmick.

      • AustinTXProgrammer says:

        Gimmick? I have brought in $500-$2000 /yr in cash back from the cards I pay in full for a few years now. Trending downward though.

  3. Lethe says:

    My parents gave me a $5.00 allowance from when I was 7 or 8. $2.50 had to go in my bank account, $.50 had to go to church (or another donation), and I could spend $2.00. As soon as I was old enough to babysit or earn any other money, the allowance disappeared, but the 50/10/40 % split remained mandatory. I think it was the best lesson they could have taught me.

    • Chipzilla says:

      You give 10% of your income to organized religion? Really?

      That’s a waste of money right there…

      • Rebecca K-S says:

        Plenty of people do. For them, presumably, it is not a waste.

        • Chipzilla says:

          Hmm they’re free to do as they wish with their money I suppose…

          It’s not like it’s going to buy them a ticket to heaven/valhalla/tian/wakamaru/etc.

          I’d prefer to put 10% of my income into a college fun for my kids. Or a retirement fund.

          • Cry Havoc says:

            It’s called tithing, and it’s not that unusual in Christian religions since it’s in the bible. I’m surprised this is the first you’ve heard of it. Did you think churches just grew their own money?

            • Jane_Gage says:

              I remember the pastor of our Lutheran church had a brand new Lincoln Town Car. If people really believed the shit they slung they’d give away every last penny. What’s money compared to eternal bliss?

          • TacoDave says:

            I doubt many Christians think it will “buy them a ticket” to heaven. I teach my kids that we give money to the church because our church helps feed hungry people and to help pay for kids to go to summer camp who can’t afford it.

            Money well spent, IMO.

      • chizu says:

        Personally, I’m not part of any organised religion. But my aunt goes to church religiously every week. I don’t know how much she gives, but she brings food to them often. When my grandmother was ill, and when she passed away, the people at her church were constantly bringing things over. They prepared meals for her, my grandmother, and my uncle. They helped her out during the funeral, they helped her with the services, and gave her a lot of emotional support. I guess one could argue that giving to a church is “a waste of money”, but at times when you need help and support, some church members will give you more than you “invested” in.

      • Lethe says:

        Yes. Because no churches ever do anything for their community.

        • LabGnome says:

          True to an extent. I think it would be better to donate to a more direct source. I think organized religions usually spend far too much donated money on themselves instead of community service.

          Of course if you actually believe in God and that your church is his favorite flavor of the month then that reasoning doesn’t really matter.

      • AlteredBeast (blaming the OP one article at a time.) says:

        I prefer to give my money to disorganized religion.

  4. BelleSade says:

    That being a housewife is a good financial decision? Sorry to be the judgmental one, but I grew up seeing how much money my parent’s didn’t have because of being mom being a housewife. It only saved money on nurseries/babysitting. Other than that they were frugal but she could’ve earned $40000 thousand more each year at least.

    • Lethe says:

      There are more factors to consider. My mother didn’t want someone else raising her kids. She stayed home with all of us, but still found ways to bring in money (babysitting, gardening and selling the produce, etc). Some people consider that more valuable than having a higher bank balance.

    • AlteredBeast (blaming the OP one article at a time.) says:

      I agree. There was a study not long ago, compairing a two income household to one with a stay-at-home mom. Factoring in the cost of child care, take out food (instead of stuff cooked at home), etc., showed that there wasn’t much of an increase in available monies by having two people work.

      Plus, there are some untrustworthy people watching children. Better off having the mother raising them (or even father), plus there is all that bonding taking place. It just seems overall a better choice.

      Then again, some mothers just want to get right back to work. I know one who went back to work as soon as possible, this way she could pay for a new in ground pool she wanted, and buy her less-than-one-year-old a Power Wheels. O_o

      • BelleSade says:

        In our case, we had other family members who were more than willing to take care of us for free, so childcare wouldn’t have been a problem. She was notoriously anti-take out food, so those years where she did work, she still didn’t spend money on it. It just seemed like a bad decision for our family.

      • Rebecca K-S says:

        Heh. I don’t think you actually agree with the comment you responded to.

      • pecan 3.14159265 says:

        There are other factors that need to be considered, like what kind of field the person is in before they decide to stop working. If it’s a field that necessitates learning and developing more skills, you might find yourself out of the competition when you do return to work even 6 years later. But if you’re in a field where you’ve got pretty much all of the institutional knowledge down, you’re not necessarily going to have as many problems. In some cases, not working might set you back and you’ll spend the next 5 years catching up.

    • George4478 says:

      I quit my job to homeschool my kids and we became a one-earner family. We did this in spite of it not being a good financial decision, but it wasn’t about money. It was never about money.

    • Hi_Hello says:

      how did all the kids turn out? if bad…yea.. that might have not been a good choice.

      • pecan 3.14159265 says:

        I don’t think there is any way to say that it’s always better to stay at home with the kids. Good kids and bad kids come out of all sorts of households. I don’t think kids who have a stay at home parent are always going to turn out better than kids who have two working parents. It depends on the parents and it depends on the kids. There’s nothing that says working parents can’t have dinner on the table or spend time with their kids. And there’s nothing that says a stay at home parent is any better at putting dinner on the table just because they might have more time to do it. It implies they may be more competent, which isn’t always the case.

    • Chipzilla says:

      I’d hazard a guess that there are very few housewives looking after kids right now who could earn $40k if they went looking for a job tomorrow…

      I’d also hazard a guess you don’t have kids.

      • BelleSade says:

        Back when I was a kid, yeah, she could’ve earned it, but more importantly, we NEEDED the money, badly. If you’re comfortable financially one one salary then the housewife thing works out, but in my family’s case, there were many years where we were very very broke and we could’ve used the extra money. I don’t want to put my kids through that.

    • corridor7f says:

      I have no desire to be a housewife / mother t’all, but it I were to have kids, I’d either quit working or only work very part-time.. what’s the point, otherwise?

    • loueloui says:

      Not a sound financial choice? I guess it depends on which yardstick you’re using to measure. If your goal is to have more money so you can have more stuff, then have at it. Of course that $40K you will probably spend $15K to have some 19 year-old take care of yours, and 30 other kids.

      My wife and I are very fortunate that I make enough for her to stay home with our child. Sure we have to make sacrifices, but we get by. This is not chauvanism, or naivete talking, the way we see it our daughter is infinitely more precious to us than whatever iCrap they are shilling this week. Taking care of her is the most important job either of us could have, and we remind each other of that constantly. Why would we want to trust anyone else to do that?

      Sure we could have -MORE STUFF!- however something tells me that our daughter would still love us regardless of how much or how little money we had. I don’t think the same can be said for Apple or Lexus or Louis Vuitton.

      If you want to be seen as a revenue stream, then by all means work yourself to death. If you want to be seen as a loved one invest in your family.

      • pecan 3.14159265 says:

        I think you’re making a lot of assumptions about why other people would choose not to stay at home with their kid. I don’t think most people who choose to work instead of stay home are doing so just because they want “stuff” unless “stuff” entails a college fund, better housing, or more nutritious food. If someone can be working and make $40,000, even if $15,000 of that goes to child care, I don’t think $25,000 is anything to sneeze at. That’s a lot of money.

    • Rachacha says:

      I think it is a case by case basis. When I was born (41 years ago) my mom was making slightly above minimum wage (high school diploma, no special skills). When I was born, she quit her job. They weighed their options, and determined that losing her small income and moving to a lower tax bracket was cheaper than paying for child care.

      For my family, we determined that it was cheaper to pay for child care than it was to lose either one of our salaries.

  5. Smiley Massacre says:

    I’m glad that I’m not like my parents when it comes to money. They’re both unemployed and close to retirement and neither one has any money in the bank. They own 2 homes, 2 brand new cars and buy all new appliances all of the time, throwing it all on credit cards.

    Yeah, my mom and dad have a small pension and they rent out the second home, but not enough to keep everything that they have.

    • JWMcDonald says:

      Seems to me to be the same way that our failing government operates…

    • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

      Do they own those things, or do the banks?

      • Smiley Massacre says:

        The banks.

        • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

          Sorry to hear it…I thought maybe they were spending down the equity, or planning on selling eventually and downsizing.

          The best you can do is offer to go over their finances, or research and recommend a fee-based, CFP-certified financial planner. Heck, if it were me, I’d even offer to pay for the planner, rather than have to feel responsible for them later. They’ll probably turn you down. Actually, if they’re like the irresponsible idiots I know, they’ll make fun of you for “worrying” about money when obviously they have a lot of stuff. But it could save you grief later on.

          Good luck.

  6. Jane_the_cynic says:

    When I was 14 my dad gave me my first credit card. Every week he made me enter my receipts in my quicken and check that against my bank statements. I’m in my mid 20’s now and am doing very well financially, with no debt. Thanks dad!
    I actually think parents wait too long to teach their children sound financial habits. By the time kids hit college their financial habits are already formed. Start young!

    P.s. I had no allowance, all the money I spent was my own that I earned at my after school job.

  7. Cat says:

    * Not telling their kids about 2 of the 5 “Money Mistakes Parents Unwittingly Teach Their Kids”.

    And poorly paraphrasing the other three.

  8. sirwired says:

    Yeah, my parents were (and still are) a good example of what NOT to do. Lucky for us, that was quite clear to myself and my siblings, and we acquired the appropriate positive lesson from their continuing fiscal mis-management.

  9. u1itn0w2day says:

    Many parents pass down bad investing habits such as buy & hold conservative mainstream stocks/investments. They don’t pay attention to them until a few months before retirement.

    Alot of parents also give the impression that they will have the same exact job for 30 years-they push a career on their kids rather than maintaining a job. They give the false impression a job will always be there. And that the same schooling/training will last a lifetime.

    • Firethorn says:

      As far as investing habits go, there’s more worse methods out there than are better than a ‘buy and hold’ strategy.

      For one, not paying that much attention keeps you from panic selling, which is one of the biggest way novice investers lose money. They tend to buy high and sell low. High frequency trading doesn’t help, the only way to effectively counter HFT is holding for longer periods.

      More realistically, if you’re not willing to consider it part of your job I recommend index funds.

  10. corridor7f says:

    My dad offered to show my how to apply for welfare, isn’t that quaint?

    • pythonspam says:

      My dad showed me how to apply for unemployment because he had been through it recently. I was lucky enough to find a job before he did — nobody wants to pay him (now 65) what he’s worth, they would rather hire 3 entry-level kids they have to train.
      There are many things our parents can teach us.

  11. Tyanna says:

    Everything I learned about managing money I learned in my business classes in high school. My parents suck with money.

    When I was a kid they gave me an allowance. I was thrilled. We went and opened up an account with my first installment of $10. I remember how happy I was. Every week I would put half my allowance in the bank and would spend the rest on candy or something. Then one weekend I went to take out some of my money so that I could buy something big…for a 10 year old anyway. Only to see my bank account was down under $10. I was shocked. I had never taken any money out! Turns out, my parents were short on a bill and had drained my account.

    They continued this practice of giving me allowance then taking it from my account until I was 16 when I closed the account and gave them the rest of the money in it. I got a job and my own account (not a kiddy account tied to my parent’s account). They continued to borrow money from me monthly until i was 25 though. That was when I finally blew up at them and started telling them No.

    So ya, I have great credit and many savings accounts and all my debt is under control….no thanks to my parents!

    • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

      Wow – that’s really crappy. Good for you for getting your own account and finally telling them “NO”!

  12. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    I started teaching my daughter about budgeting, paychecks, bills, etc. when she was in grade school. I’d sit down at the kitchen table to work on bills (in our pre-computer days), and I’d show her how much my take home pay was, which bills needed to be paid, how much gas cost and how many gallons we needed, etc. She clearly understood when I said we couldn’t afford the newest gaming cube or whatever, that I wasn’t just being mean – there was just no money for it.

    Fast forward to today: she’s very frugal and good with money. I’m glad I was up front with her and taught her how to budget.

    • HogwartsProfessor says:

      I wish my parents had done this with me. Of course I have a serious difficulty with numbers, but if they had helped me understand it better as a concept rather than numerals, I could have saved more money when I was younger. All anyone did was throw tutors at me so I could pass basic math class (which I never did).

  13. Outrun1986 says:

    My parents taught me very well about money, I was taught not to buy things unless they were on sale, to use coupons way before couponing was cool amongst mom’s and to put money in the bank. When I got money for birthday or christmas it had to go in the bank, especially when I was too young to understand or to buy my own things. I was taught in high school about finance and how things work. I am not sure what they teach in high school these days but from reading on here it seems they don’t teach kids about the basics of finance. I guess if they taught kids they wouldn’t be able to sell as many iProducts and $2k a year smartphone plans to the kiddie’s and their parents.

  14. neilb says:

    How about learning to have responsible spending instead of budgeting?
    “Winging it” is an ideal financial lifestyle if you are committed to having no/minimal debt.
    I learned to never have a budget and instead to simply be frugal. Instead of rationing my finances I simply just don’t gorge on purchases. Thus, we never have to ration.
    My parents did the same and we always had sufficient money to do what we needed and most of what we wanted. My kids, likewise, will (I hope) value having cheap cars, modest accommodations, no debt, and a good cash cushion.
    The kids have had bank accounts since they were born. This is a good reminder to start discussing it with them to let them feel the “could spend” versus “should spend” decisions.

    • sirwired says:

      Some people need a budget because they are only making enough to just scrape by. It is possible to earn only barely enough to live on; making things like grocery budgeting kind of important.

      I’ve never been in that situation myself, but I could see that for some people “responsible spending” just can’t cut the proverbial mustard.

  15. Kuri says:

    Eh, I use a card for purchases, but I plan to explain to my younger cousin that the card always draws from my bank account and I always, ALWAYS check my balance before a big purchase to make sure I can pay for things I need.

  16. hansolo247 says:

    My parents were always sqirrelers. They saved a LOT of money. It came in very handy for extended unemployment in the early 90s.

    That habit has carried over. At 36, I have almost $200K, with my only debt last month’s credit card charges. That’s taken a lot of sacrifice (10 year old paid-off car, etc), but it means I can leave a bad job and not worry about unemployment, go back to school, not worry about retirement, etc. I splurge every now and then, but I buy something durable.

    Really, my income isn’t even that impressive…good but not really very high. I repair EVERYTHING that breaks…cars, electronics, furniture, etc, all by myself. I buy used goods. I don’t sign on to monthly commitments (maids, dog walkers, etc). I avoid debt obsessively. I’m also a cheapskate so I’m perpetually single lol.