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#2 Common Financial Parenting Mistake: Talking Negatively About Money

Chicken Little's philosophy of "the sky is falling" is what many families are feeling and maybe even saying these days. Bad news about money dominates the airwaves. Children will normally assume the worse when they hear "this is a disaster" or "people are losing their homes and jobs in record numbers".

Negative talk by parents and television is not going to help children, they are anxious enough already. A survey done by the Scarborough Kids Internet Panel with kids ranging from 13 -17 showed that 74% of kids say they are worried about the economy and 47% say they’d like to talk more with mom and dad about the crisis.

Children learn by example. As a parent you do not need to be perfect but you should consider what you say about money and do with money in front of children. Even though these are times of crippling debt, erratic investment markets and real estate turmoil; this can be an ideal time we can truly teach our children the value and proper use of money.

We are not talking about overloading children with too much information but to listen to them and enlist their help. Talk to your kids whether they are five or fifty-five about what is worrying them. Keep matters in perspective. The sky is not falling! Tell stories of how grandparents survived the Great Depression. People remember family stories and can draw strength from examples of facing life challenges.

Whether your cutbacks are involuntary or precautionary explain in simple terms why the family needs to spend less. Ask kids for ideas on how they family can save money. Teach them how to budget. Make saving real. How can we save on our next vacation (drive versus fly)? How can we save on energy costs (turn off the lights when we leave the room)? How can we save in college costs (public versus private, junior college for the first two years, in-state versus out-of-state)?

Teach kids to be choosy customers while shopping. Teach them how to analyze value and price to encourage smarter spending habits. Let them know where you will economize and where you won’t. Teach the difference between want and need.

The key point is to teach how family wealth transcends money. We are not our houses or cars. Even if we have to make changes forced by the economy we are still the same family. In helping your children become more educated about money management it will serve them through every stage of life.