10 Mistakes Parents Make When Teaching Kids About Money

Like it or not, you are your child’s financial role model. Monkey see, monkey do. This is a terrifying idea for those of us who weren’t taught about money ourselves. How can you instil positive thoughts and behaviours around money when you are trying to figure out how to be financially successful yourself?

Well, a good place to start is thinking about your own behaviour and trying to eliminate or change some of your less helpful habits. Here are some common ones to look out for:

  1. Not Talking About It

Many parents find it difficult to talk to their kids about money. Mostly because they were not taught about it themselves. So they don’t know what to teach or how to teach it. This is compounded by the embarrassment of not having all the answers and even worse, having to admit they’ve made costly mistakes.

However, not talking about money to kids is setting them up for financial disaster. After all, money makes the world go round. We all use it, we all need it. It gives us choices and the freedom to do things for ourselves, our family and our community. Kids need to know about it so it’s essential we include them in our day to day conversations - like doing the shopping, buying stuff online, going to the bank, budgeting for a holiday. Don’t worry if you don’t have all the answers - honesty is the best approach then they know exactly where their starting point is and won’t get confused when you try fudging your answers. 

  1. Relying on schools

Some families are comfortable financially and the parents don’t think it necessary to teach their kids money management - there will probably always be enough, even if their kids do make mistakes or miss obvious opportunities. In other families the shame and embarrassment of not having much means they leave it to chance. Either way they hope schools will pick up the batton. But this is foley. 

Only six states in the US require a stand-alone personal finance course to be taken in high school. Less than half of states (21) require high school students to take a course that integrates personal finance content into existing classes such as math, economics, civics and career and technology courses. Is five to eight hours in a course enough? Of course it’s not. 

And this is at high school level. Research has shown that a person’s financial habits may be established as early as seven-years-old. By this stage many kids have already got into bad habits of instant gratification and spending beyond their means. They don’t know the value of money, that it is usually hard earned, it doesn’t fall off trees or come in an endless supply from your wallet. Kids need to be taught the basics when they are starting to have money of their own and very few elementary schools have a dedicated program to do this.

  1. Giving them money 

Christmas and birthdays are obvious exceptions but giving them money without them having to earn it means they don’t learn the value of it. That it doesn’t grow on trees or appear automatically from a hole in the wall. Money is earned by working hard and being smart. It’s one of life’s immutable laws and the sooner they get that ingrained in their heads, the better for their future and your cashflow.

  1. Paying them for chores

Kids need to know that everyone pitches in. When it comes to house keeping, chores are part of the deal. When everybody helps, Mom and Dad don’t end up exhausted by having to do it all and kids get the satisfaction from having contributed. However if you pay your child for completing basic chores, like washing the dishes or hanging out the laundry, you undermine the feel good they get from doing it for love. 

A better option is to pay them for one-off projects or jobs beyond their regular chores. For instance cleaning the windows, washing the car or mucking out the hen house. Paying them for these helps them appreciate the value of money whilst maintaining the notion that in families you all help out.

  1. Making decisions for them

When it comes to your children’s financial choices, it is a mistake to try and micromanage every spending decision they make. Not only will they not learn to think for themselves, they won’t experience the negative consequences of poor choices. Many of life’s most valuable lessons come through trial and error. Let them make their own choices. Allow the bad decisions to hurt a little and the good decisions to feel good. Giving them the freedom to experience the ups and downs of financial choices helps them understand the value of money and the importance of making smart decisions.

  1. Forcing them to save

As a parent you know the importance of saving and it can be tempting to make your children save money whether they want to or not. But we all know the more you demand a child do something, the less they actually want to do it. It’s better to explain the benefits of saving to them (if they are disciplined they can eventually buy what they want), than to force them to do it. The trick is not to give in and pay for things when they complain they’re not saving fast enough, you’re being mean, you don’t love them etc. That just reinforces that you will always come to the rescue when they don’t have what they want and that money just appears for them without any effort.   

  1. Thinking they won’t understand

A natural concern for many parents is their kids won’t understand more than basic financial concepts like spending and saving. However kids are smarter than you think. They can understand topics like mortgages, real estate, investing and business if you start at a basic level and level up when you know they’ve got it. Starting early ensures they are familiar and comfortable with these concepts, which means they are more likely to embrace them confidently and successfully as adults. The younger they start learning about these things, the better.

  1. Doing the shopping without them

Sure, your shopping trips will be less stressful without a bunch of hangers on but without experiencing spending decisions in real life, for the kids it’s all just theory. So, rather than leaving them with your spouse or a sitter the next time you go to the store, take them with you and explain things to them as you go. Comparing products can help them understand the difference between cost and value. Sharing your shopping budget with them will help them learn how to spend within their means. And even though debit cards and mobile apps offer painless payment, consider using cash and letting them observe the physical exchange of money for goods. This will help them understand that once you spend your money, it’s gone.

  1. Not teaching them about credit cards

Credit card debt has the potential to derail your kid’s long-term financial stability. Without understanding the true cost of debt, your kid may be headed for a gutser when they turn 18 and get inundated with credit card applications. They may be lured into getting credit cards and thinking their credit limit means they “have money.” Of course this is not the case. It’s borrowed money and if the repayments are not met, the interest escalates rapidly. Try lending them a small amount of money and setting a time frame for them to pay you back, with interest. When they are earning money by doing jobs and see that quick access to money requires them to pay back more than they borrowed, the value of their hard-earned dollars will become more apparent.

  1. Not talking about your giving 

One of the best things we can do as citizens is to be generous and use our money to help others whenever possible. To teach your kids how to be generous, you need to model it for them. Start by talking with them about how it is for others who are less fortunate than them then get them to think how your family can help. If you decide to contribute financially, show them where the contribution is coming from out of the family budget. It should come out of surplus or be a budgeted item. By role modeling your giving in a financially responsible way, it creates a giving mindset that will nourish their soul as well as help others in need. 


Teaching your kids the value of money and helping them develop solid financial habits of their own will pay off when they get older. They are more likely to be financially independent and less likely to come crawling back to you with their tail between their legs when things go wrong.

By avoiding these 10 mistakes, you will be off to a good start. There’s a lot more you can teach them and fortunately you don’t have to figure out all the money matters on your own. MoneyTime is here to help your children with the knowledge and the confidence to make smart financial decisions as they grow up. Visit here to see how our financial literacy game will get them off to a solid start with all the basics of personal finance.