12 December 2014
Bad Money Habits: Don’t Pass Them to Your Children

Young children acquire knowledge about the world around them from their parents. Everything from crossing the street safely, to basic money management skills – children often copy the behaviors of their parents.

So, if you overspend, your children may view this as acceptable and continue to overspend when they become self-sufficient adults. If you save money, invest for the future, and manage household expenses effectively, your kids are likely to take those habits with them when they leave home.

Whether you’re raising kids, or you’re an adult with money issues inherited from your parents, changing learned behaviors can help you enjoy a more financially secure future.

Start with an Analysis of Your Money Management Habits

Are you a penny pincher or an impulse buyer? Do you measure success by the size of your investment portfolio? Do you spend money on kids to show you care about and love them? These are the kinds of attitudes that are often passed down from generation to generation. However, whether you’re a parent teaching good money habits, or the product of a home where overspending was the norm, you can change your spending and saving habits. Increase your awareness of where the money goes by keeping track of your expenses for a month. Then set up a budget that works for you and stick to it.

Set an Example

Children imitate their parents. Set a good money management example for your kids to follow as they move into adulthood. Don’t just tell your children how to be money responsible, show them by managing your household finances carefully, avoiding unnecessary debt, and setting aside money for the future, or for unforeseen emergencies.

Set Attainable Financial Goals

Start your transformation by setting reasonable financial goals. Maybe your objective is to max out your IRA contribution each year, or to save money for a down payment on a family home. Whatever your objective, keep your focus on your goals and work to reach those goals by changing your attitude about money.

Don’t Go Cold Turkey

Cutting up your credit cards may be a good idea if you’re swamped with debt, but it might be less stressful to simply cut back on unnecessary spending. Maybe keep one credit card for emergencies and pay cash for everything else. This way you slowly whittle down the mountain of debt that your children hear about across the dinner table.

Help Your Children Set Goals

If your teens work, have them set aside a portion of their earnings to save for college or trade school. The sooner your teen starts saving for an education, the more savings that child will have. Talk to your banker about setting up one of the college savings plans maintained by the Nevada Secretary of State. Other savings programs and tuition resources can lower the cost of a quality education. Your bank representative can help get you and your children on the right money management path.

Talk about Money Management with Your Children

Fiscal responsibility isn’t always taught in schools, so as a parent, it’s up to you to teach the fundamentals of sound money management. If you’re a self-directed investor, you know personal finance basics – risk versus reward, preservation of capital, diversification and other money management fundamentals, including the development of a household budget. Pick a good time to talk over money and how it should be managed. Demonstrate the power of long-term investing with earnings numbers from your own portfolio, or find examples online.

Parents are in the best position to not only teach fiscal responsibility, but to demonstrate it every day. If parents value savings, chances are their kids will, too. It’s a learned behavior.


Regularly review your child’s spending habits, set limits, and establish financial goals that benefit the child. Prepare them to manage money smartly – it’s a valuable gift to hand down from one generation to the next.


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.

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