6 Money Mistakes to Avoid
As parents, we all tend to feel a tad overwhelmed when it comes to fulfilling our child’s needs, for there’s just so many things to see too! In the end, many of us tend to not divert from any initial financial planning or abandon them completely. There are a few things that can go wrong if we’re not careful about money, so let’s take a look, shall we?
Giving in to trends
Many kids have stuff they don’t need and we know not if their parents had a lot of money to spare. The fact remains that if you’re buying something for your child just because many others are having it but it is of no real importance, then you yourself are teaching junior that it’s alright to buy stuff just to ‘fit in’. Encourage instead the purchasing of stuff that’s needed. Impart into your young one the importance of valuing money and spending on things that you need first and on stuff you like only if you really can afford it, not buy things for your kids just because other kids have it. Only a parent can teach a child the difference between needs and wants, and that everything needs to be earned in life.
While we’re well aware that it’s natural to want to shower all the love and happiness in the world on our kids and watch their faces light up in glee, but continuously giving in to every whim and fancy of children will eventually leave a hole in your wallet, so do take control. There is a need for kids to fully understand the cost of living and the need to plan accordingly.
It’s a good idea to pay the initial college fees and give a head start to your child in a career, but it should not be done at the cost of your future. There are several ways to take care of your kid’s education. Part-time jobs, scholarships, and student loans are a few things that may help the child get through his or her higher education easily. Remember, it’s just as important for you to save for your life after retirement too and prevent dependency on your kids.
Plan before spending
Lack of financial planning may give rise to financial crisis and make life difficult for the whole family. So, remember, while there is no harm in fulfilling all the necessities of your kids, it should not be done however only to match the contemporary standard of living.
First and foremost, in the matter of splurging on expensive items, parents need to ask themselves that if an inexpensive thing does the same job as an expensive one, why is there a need to go for the expensive one? If you, as a parent, learn to make out the difference between a need and a want, the kids will automatically learn it from you.
Furthermore, if you are convinced that buying only branded items means giving your kids the best, then they will also start believing the same and soon get addicted to brands, unwittingly deceiving themselves into believing that only branded stuff can get the job done. This addiction will grow more as the kids grow older and pretty soon they’ll be ‘needing’ clothing, bags, shoes, electronic devises and gadgets from upscale names because that’s the way they were brought up.
These will inevitably add up to unnecessary spending with potentially heavy burden to a family’s finances which may even give rise to family crisis, parents blaming one another, etc. To avoid going down this road, start teaching your child the value of money and the art of making smart purchases from young, so that they cultivate smart money habits which will serve them well in the future and also help keep the family’s finances in check!
Putting off ‘money talk’ with kids
There is a big difference in talking to your kids about the birds and the bees, and talking to them about money. A kid does not need to be of any certain age to be taught lessons about money! In fact most are not as immature as their parents think they are when it comes to the subject of money.
Kids as young as five or six are capable enough to understand basic financial matters and can take up the responsibility to deal with their own little expenses. Moreover, if you have started giving a monthly allowance to your child, get him or her to either pay or partly pay for desired items that you feel are luxuries. This will make him understand the difference between needs and wants, and also think before spending because his or her own money will be going into it.
Failing to buy insurance
As long as we are healthy, we don’t really feel like getting life insurance or disability insurance. However, you never know what may happen the next moment; probably a mishap at the workplace may shatter the life of your family members and leave you in a helpless situation. Therefore, disability as well as life insurance should come in handy in case of any emergencies.
It’s completely acceptable that you need to work hard to fulfill the needs of your family and give them a comfortable life. However, it is also important to understand the capacity of your mind and body and the limit to which you should stretch yourself to work. While working more, you may happen to ‘live’ less and at the same time put your health at a higher risk of several health problems.
Leading by all the wrong examples!
Apart from the money mistakes that parents make with their kids, they often fail to plan the finances for other things. On one hand, some parents keep telling their kids to use money wisely, but on the other hand, buy expensive gadgets, spend on luxurious items and lavish vacations, etc.
One thing parents need to know is that children learn more by watching their parents’ actions rather than what they say. Hence, set good examples before them. They’ll learn more that way. Show them that you do indeed walk the talk and practice what you preach!
Be money smart for your kids and your future
Being money smart will pave the way for you to impart good money habits in your kids and at the same time. ensures that you can keep aside a decent enough amount of money for your future too!