The worst things you can teach your kids about money

We all want our children to become financially sound adults, but do we teach them the right habits early on?

With a toddler and another baby on the way, this is something I think about quite a lot. Instilling good financial habits seems to me to be as important as teaching them to clean their teeth or eat plenty of fruit.

So I’ve been looking at some of the worst things a parent can teach a child about their cash. Feel free to add your own in the comments below.

Money is scary

Some parents don’t want to talk about money to their kids, assuming it might make them anxious or worried.

But research by PKTMNY, a company that lets parents create a pocket money account for their children online complete with savings targets and a Visa pre-paid debit card, shows that’s not true.

In fact, it found that nearly 70% of children feel happy when adults talk about money with them and just 1.7% feel unhappy.

[Related link: Get a free 3 month trial of PKTMNY plus £5 to start you off]

Saving is boring

As a child, I was often given small amounts of cash at birthdays and Christmas – to my despair.

My mother would instantly snatch the money away to pay it into my ‘bank account’, which seemed to me to just be an excuse for taking it off me.

I was grateful for the savings once I was a student, of course, but as a child saving money just wasn’t fun.

As an adult, it’s taken me a long time train myself into a savings habit, I want my children to understand the value of saving and I think it has to be quite tangible.

So I plan to let them spend some of their savings on toys and games they really want, so they can see the value in putting aside small amounts for a bigger reward.

[Related feature: My worst money mistake]

Money is coins

We want to teach our children to handle money so that they can manage their finances as adults. Yet a lot of financial transactions don’t use coins – we routinely use credit or debit cards, make online payments and manage our accounts online.

It’s important to make children aware that money isn’t just notes and coins, or they might find it hard to keep track of their spending when they first use a debit card.

“Children are practical, visual learners who need to learn by doing and in a way that reflects how they see the adults in their world, especially their parents, using money,” said child psychologist Dr Elizabeth Kilbey said.

So you might decide to use a service that lets children spend their pocket money with a card. Or you might want to encourage them to keep track of their savings via the internet. But if they’re only used to budgeting the coins in their pockets, they may well struggle to manage their money in the real world.

[Related story: Would you give and 8-year-old a debit card?]

Maths is hard

The best maths lesson I ever had as a child was playing Monopoly at the end of term. For the first time in my life, I could suddenly see that the numbers we were being taught to manipulate had a real purpose.

When maths is taught in the classroom, it can be hard to remember that it’s relevant to the outside world. And there’s such a general acceptance that ‘maths is hard’ that it’s not surprising kids get put off.

But having a basic grasp of numbers and even just simple sums stands children in such good stead for managing their money in adult life.

A survey by Nationwide recently found that more than three people in four believe financial planning should be taught in schools. Half of the adults surveyed said they thought their finances would be in better shape if they’d had financial education at school.

Managing your money is just maths with coins instead of counters. Encourage your children to view maths as relevant, and try to put their homework in the context of real financial sums.

Adults don’t mind debt

Of course, kids only learn a small amount from what adults tell them. They learn far more by watching how grown-ups behave; you can’t eat chips every night and expect them to believe you when you say vegetables are tasty.

So if you’re chaotic with your cash, then that’s what your kids will learn from. If your teenage children see you using loans to pay for holidays, or putting Christmas on the credit card then that’s the financial example they’ll copy.

If they see you hold back on a purchase you really want, so that you can pay for it from your savings then they’ll learn that that’s how it’s done. If you explain why you can’t afford to buy them the latest iPad or encourage them to consider how much it costs to run a house, they have a better chance of budgeting when they eventually leave home.

That’s what I’m relying on as my sons grow up. I think they’ll thank me for it more than if I max out a credit card buying them designer trainers. Well, in the long run at least.

What do you think? How should parents teach their children good financial habits? Share your thoughts with other readers using the comments below.