You might be teaching your kids the worst financial advice and you may not even be aware of it. Experts say that it’s best to start teaching kids about finances at an early age. This is so they could incorporate this in their lifestyle and become responsible with regards to this area in their life. While every parent’s intention might be good, they may also be teaching their kids the wrong way about handling money. Here are some of the most common mistakes parents make when teaching their kids about finances.
Enroll on the Finest College or University
It’s every parent’s dream to be able to send their kids to the finest college or university. However, this may not always be practical in real life. If you’re paying for your child’s college and you really don’t have the means to pay for the best university that could be too expensive, there are other options around. This is also true if your children would be taking a student loan as they would be the ones who would shoulder the payment in the future. The best thing to do is to look around and compare the different options that you have. There are other schools that could provide great education without spending a fortune.
Pay with Credit Cards to Accumulate Points
Credit cards are helpful in emergency situation and you run out of cash. They are also needed in order to qualify for mortgage or car loan in the future. However, they should be used responsibly and using them just to get more points for rewards is not a good reason. It’s best to teach kids to spend only the money that they have so it’s always ideal for them to budget with cash.
Pay Only the Minimum on Your Credit Card
If the time comes that your kids would start to use credit card, you should teach them to pay the entire amount that they owe, instead of paying just the minimum. It’s a misconception that having some balance on your credit card would improve the credit score. This isn’t proven, but what would surely happen is that the interest would accumulate on the unpaid amount.
Parents Paying the Down Payment of Child’s Mortgage
There would come a time that your child would move out from your house and get their own place. While you may want to help them get settled by paying or contributing for the down payment of their mortgage, this may not be good as they would not learn how to make it on their own. You should let them get a house that they could afford so as early as they move out, they would learn how to manage everything on their own without having to rely on you and become financially independent.
Buying Things with Your Money and Letting Them Pay for It
It’s common for many parents to buy something that their kids want and ask them to pay for it in return afterwards. They might ask them to do some chores or let them save money from their allowance to make the payment. However, this shouldn’t be done as they shouldn’t spend something that they don’t have yet.
Do you know of other financial advice that parents are teaching kids incorrectly? Type your comments below.
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