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8 Parental Mistakes That Can Ruin a Child's Path to Financial Success

Monday, October 3, 2016   (0 Comments)
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Inc.com 10/03/16

 

Many parents today are not in the financial position they hoped to be at their age. As they struggle to manage their own finances, they also begin to worry about the examples they are setting for their children. How much do their actions actually have to do with the financial success of their children? Actually quite a bit, according to financial literacy expert Neale Godfrey.

 

Godfrey, a member of YPO, is the CEO and president of Green$treet Commons, Inc., which delivers financial literacy and ecological lessons for children in pre-school through high school. Her programs have helped more than 2 million kids learn how to gain financial confidence and handle money properly.

 

In 1972, Godfrey started in banking with Chase Manhattan and became President of the First Women's Bank. After Godfrey noticed that her own small children thought "money grew on trees," she was inspired to create programs and literature that would make children and their parents smarter about managing money. Godfrey actually partnered on a real bank for kids at FAO Schwarz in New York City. Since then, she has published more than 27 books including a New York Times bestseller and has appeared with Oprah.

 

Godfrey insists that well-meaning parents are making needless mistakes with their children's understanding about money. She outlines several here along with the remedies that will help set your children on a surer path to success.

 

1. Emphasizing money over values.

People do many things because of the promise of financial reward, as they should. Everyone needs the means to survive and thrive. Not every responsibility has a natural connection with cash however. There are other intrinsic rewards that come from persistence, or the love of justice and fair play, or relationships. If cash is your reward for every good choice, expectations and their value system can be unrealistic. "Money should be the reward for work," says Godfrey, "not for getting good grades or showing good behavior. That is a responsibility." Teach your kids that personal growth and helping others can be as satisfying as a payday.

 

2. Not teaching the value of money.

Every parent hopes to give their children enough that they will never know want or deprivation. But many parents avoid financial discussions about where money comes from or how a budget actually works. Godfrey warns against keeping kids in the dark about finances: " If they only ever see parents spending money, that becomes the only thing they associate money with. So when they go to college with a credit card, they spend, spend, spend. Talk to them and teach them how to use it and the consequences of using it poorly."

 

3. Teaching that wealth is a value.

According to Godfrey , "Too many people place an emphasis on how much money they have, giving children the idea that their worth is the equivalent of their family's wealth. We are not our money. We are our value system." Help your child understand that while money can certainly be used in the service of bettering people and society, it is not a substitute for, or sign of, compassion, morals and ethics.

 

4. Feeding their sense of entitlement.

People love their kids, and many love saying "yes" to their requests, whether begging for a new game or 10 more minutes of Xbox time. Giving in too frequently, or changing answers from "no" to "yes" in the face of nagging and tantrums teaches kids that they are entitled to whatever they want, whenever they want it (and that's usually NOW). Godfrey emphasizes the need to make clear to your kids that your decisions will stand, whatever their emotional response might be. "Explain that to access my money means that you have to follow my rules," says Godfrey, "and that the same is true for your time, your home, and anything else that falls within your parental responsibilities."

 

5. Not encouraging their generosity.

Godfrey appreciates that even the most difficult children have the capacity for kindness and sacrifice. Even so, she is surprised how many kids think that their parents' charity work is all about dressing up and drinking champagne at gala events. They just haven't seen that anything else is involved! Godfrey advises parents to openly discuss charitable giving, and help them to participate in volunteer work. " Get them involved with charity on the ground so they can see the impact that giving to others really has."

 

6. Showing them conflict, but not resolution.

Conflict is a regular part of life. Kids often find it scary and stressful to watch parents argue, but sheltering them from the resolution after an outburst only allows them to see the negative side of conflict. Godfrey advises, " If they hear you fight, be open with them about the conflicts on hand and acknowledge that sometimes adults raise their voice during difficult discussions." If the children are allowed to understand the stakes of the argument and see you working to settle differences, they will learn that conflict can lead to constructive and happy solutions.

 

7. Not insisting on the summer job.

Food service, landscaping, childcare, and other types of manual or wage work are not just fodder for teen movies. A work environment demands different types of responsibility and accountability than home life, and gives kids firsthand experience with adult challenges. " Moreover, having them work from a young age forces them to learn the value of having their own money and the difficulty involved in earning it. They will learn not to take it for granted," argues Godfrey.

 

8. Not preparing them for a future without you .

When talking to kids about financial responsibility, one of the biggest questions that Godfrey gets is, "What happens to me if mom or dad can't be there anymore?" Children worry about this more often than parents realize. Even if your kids seem blissfully unconcerned with your eventual demise, it is important for parents to discuss a life without you, especially if that may occur before they reach adulthood. " Many parents just tell kids not to worry, that things will be ok. This answer creates more anxiety because it says nothing. It fails to acknowledge who will take care of them, what money will be there for them or even where they might live."


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