Here are 5 Financial Mistakes Made by Parents to Their Children

TRIBUNBATAM.id - For many parents, talking about finances with their children is a difficult thing to do.

Some parents choose to do other things rather than discuss about finances with children. Sometimes, parents' financial literacy is also not qualified, so that it has an impact on the financial behavior shown to children. 

Reporting from CNBC, Monday (2/12/2019), according to Brad Klontz, author of the book Mind Over Money and one of the founders of the Financial Psychology Institute, parents must identify their beliefs about finance and look back on events that occur in families that are related to money.

Klontz said, there are certain events that have a big impact on people's relationships with money. He gave an example is the financial crisis that made some people distrust financial institutions because of the failure of the banking system. 

According to Thomas Henske, a certified financial planner, many parents feel reluctant to talk about money with their children. Because, they do not want to answer "wild" questions that children may ask.

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Henske gave an example of the question is one of them, "Are we rich?" 

"That is the beginning of a good conversation. Answer with questions. Rich has a different meaning for everyone. What do you mean by rich?" said Henske.

Here are some financial mistakes parents make toward children, whether they realize it or not. 

1. Always say "yes"

"Parents sometimes sacrifice too much for their children," said Liz Gendreau, author of a blog on family finances.

Gendreau said, it is a mistake if parents give everything to their children, especially if they have to sacrifice pension funds. Parents must balance their own needs with the needs of children. 

As for Henske said, many people misinterpret between love and giving something. According to him, rather than giving a lot of things to children, spending time with children is more valuable. 

2. Buy immediately

Children must be taught from an early age the difference between wants and needs. 

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Henske said, parents must teach children strategies and discussions about how much they want something. One way is to compile a list of items you want.

If the child is still too young to write, parents can print pictures of things the child wants. 

3. Do not teach children about financial basics

"It is important to sit together with the child to discuss the basics of finance and if the child is old enough, teach about the dangers of using a credit card," said Klontz.

Also teach about the difference between debit and credit cards. About the concept of credit cards, you can explain about borrowing money from banks, but there is interest that follows.  

The debit card is used for transactions using one's own money. When shopping with a debit card, the money is taken from your own account.

Henske revealed, children who do not understand how credit works can face financial disasters when they later have credit cards as adults. 

4. Do not involve the child in big decisions

According to Henske, if children are not part of the process when buying a car or planning a vacation, they miss many important lessons about finance.

That is, many opportunities are lost to teach children about the value of money, because they do not fully know how expensive an item is.

Children may think that buying a Maserati car is cool, but don't know how much it costs. 

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The danger, later on, they do not have the things that support to make the right decisions related to the university where they will continue their education or career as they want.

Planning a vacation might be more fun than talking about choosing a car and negotiating with a dealer.

"Talk about the price of a plane ticket or what the budget is for food," Henske said. 

5. Assuming the topic of money is taboo

Henske said, not talking about finance is the same as not providing sex education to children. He recommends that parents openly talk about finances with children.

"We still treat money and finance as taboo," Gendreau said. 

He does not recommend parents discuss finance in depth while the child is still sitting in kindergarten. However, when children are in their teenage stages, children can already be talked to, for example, about tuition.

"Children will benefit from learning how to make a budget. The greater you can educate children through examples in real life, the better," Gendreau explained. (*) 

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