15 Wealth Killing Mistakes Parents Make

Why hello there my friend. Now, I hate to break this to you, but many of you are in a toxic relationship with money. If you're not careful, you're going to pass on that toxicity to your children. Your actions are teaching them how to behave with money, and they're going to carry that with them throughout their lives. Some of you live very cheaply, which can make your child feel like there's never enough. So, when they start earning money, they spend it quickly because it makes them feel safe. Some of you live beyond your means, which sets them up to be entitled and dependent on you.

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And all right, back to normal programming. Okay, you have the power to give your children a healthy relationship with money from childhood, but first you need to realize the mistakes you're making so you can fix them. And that's why we're here today. Our video yesterday about the 15 investments that will make your children rich had the practical, hard-hitting advice. This one's going to tap into the bad money habits, behaviors, and choices that you're passing on to your children.

Here are 15 wealth-killing mistakes parents make:

Number one: telling them it doesn't matter what you do as long as you're happy. Who remembers their parents pushing them to study for a degree they hated? It's a tale as old as time. The talented artist is forced to study medicine, and they're perpetually misunderstood by their parents. So, the children who experienced this pressure vowed to be different. Now, we've got a generation of parents who are sending their children out into the world with those rose-colored glasses on. The reality is that passions and dream jobs, well, they don't typically pay that well. How will your children afford rent, utilities, food, and health care on top of a student loan on a meager salary? You don't have to push them to get a career that makes them miserable, no, but you could lay out the financial reality of these jobs and work toward a middle ground together. It's your job to balance the lessons of personal fulfillment with the practicalities of earning enough money to live the life they want. Encouraging them to follow their dreams without breaking down the financial reality of life is like sending them off sailing into the sunset without teaching them how to sail.

Number two: showing them that debt is normal and making the minimum payments is okay. The amount of debt a lot of people have is still a new part of our economic culture. Since it's relatively new, the consequences of high credit card and loan debt weren't fully understood. Even now, we think debt is good because it helps with your credit score, and people believe that if you make the minimum payments on time, then you'll be fine. But do you plan and draw a hard line on how much debt they need to go into to get a good loan or credit score? Have you worked out how soon you can pay it off to keep the interest low while maintaining that score? Putting your normal daily expenses on your credit card, using it for fun things that you want to do, and telling your kids that they'll be fine if they pay the minimum amount doesn't prepare them for any kind of financial emergency. When children grow up seeing debt as a standard part of financial life, well, they become desensitized to it and the risks. They don't understand the responsibilities that come with borrowing; they see it as free money because that's what you're showing them. Eventually, they'll become comfortable being in perpetual debt, and that's not a financial life anyone should be living.

Number three: modeling poor work ethic. All the stories, speeches, and lessons in the world aren't going to make a difference if you're not walking the walk. You can't tell your children to save, invest, and work hard if you're not doing that yourself. You have to model it for them. If your child is watching you change jobs every month, if they're watching you take lots of sick days and hearing you complain about work, then they're going to associate working with unhappiness. They're never going to want to throw their energy into anything. They'll think that jobs are there for a good time, not a long time, and the reality is you need both.

Number four: encouraging them to take out a student loan. Now, as controversial as it is to say this, allowing your 18-year-old child to take out a loan for their education is a major mistake on your part. If you couldn't put away $100 a month in a compound interest account for the last 18 years to be able to help them out, then how can you expect them to understand the gravity and shackles of taking out such a massive loan while they're so young? Student loans, especially in the U.S., can keep your children poor for most of their adult lives. You're the adult here; you should be investing in saving for their education. You don't have to pay for everything, but it's important to give them some kind of breathing room so they don't begin their adult lives already under crippling debt.

Number five: not opening a bank account for them. You know, we see far too many people opening their first bank account after they turn 18 years old. As a parent, it's your responsibility to do your research and help them open an account as soon as possible. Most banks offer teen checking accounts starting at 13 to 15 years old. Some places even offer accounts for children as young as 6 years old. Opening their bank account when they're young will teach them the concept of interest and budgeting. They'll get to watch their money grow. It also gives them a sense of autonomy and responsibility, so they become confident in managing their finances, something that is so important for their relationship with money.

Number six: buying them a car. Oh, another controversial take. Parents say they want to give their children the life they never had. They want to be able to provide for them, and one of the biggest milestones is buying your child a car. Now, some places aren't walkable at all, so cars kind of become a necessity, not just a rite of passage. In other places, however, there's great public transportation and are very walkable, so buying a car for your kid is just unusual. But no matter where you live or what you decide to do, you have to do it in a way that doesn't encourage financial codependency. A car is a big step into adulthood, and your child deserves the feeling of accomplishment that comes with taking those steps on their own. It may relieve a financial burden temporarily, but it could come with a lifetime of expecting bailouts or help. Give them the gift of motivating them to work for the milestone; that's something healthy and positive that they can always carry with them.

Number seven: handing them money whenever they ask you. Making money is tied to work, and managing money well is tied to good decisions. You don't show them this when you just hand them cash. If they want to go to the movies tonight with their friends, they might ask you for 50 bucks, and you hand them 30 in an effort to show restraint and discipline. But it's so much better for everyone when you give them a regular set amount based on the work they do around the home. You could work the funds into your budget, and they know that if they put in the work, they'll get something in return. If they spend it all in one go, hey, that's on them. They need to learn to save for special occasions, and handouts don't teach them this.

Number eight: allowing them to hear about your financial worries. If your children see that you're constantly stressed and worried about money, well then, you'll hand them a scarcity mindset, even if you don't mean to. They grow up feeling that money is always hard to come by, which limits their thinking and ambition. Children can't contextualize financial issues, and the emotional burden will distract them from important things, like their education or social development. Most importantly, they'll see financial worries as a reflection of their own worth. You don't realize this, but they'll feel guilty for costing you money, and that affects their self-esteem. Now, while you should teach them about financial issues, those problems need to come with a solution that you model. Teach them that it's okay to take financial risks, but they also need to plan out their own safety net.

Number nine: fighting about money with your partner in front of them. Children learn so much through their observations. When they see you fight about money, you're teaching them that money is a source of conflict instead of a tool that should be managed together. Discussions about money at home shouldn't be associated with anger, resentment, or fear because that will just lead them to growing up with negative feelings about their finances. In fact, studies show that children who witness their parents fight about money are far less likely to talk about it or even pay attention to it because they associate money with negative emotions. Managing money isn't complicated or contentious, but when you're always fighting about it, your children start to think that it is. Because otherwise, why else would it cause so much conflict? And that leads us to the next point.

Number ten: avoiding conversations about money. Now, in an effort to protect your children from your financial problems and situation, you might think that not talking about money is the best course of action, but you couldn't be more wrong. Money is a fundamental part of daily life, and by not discussing it, your children grow up without the tools and understanding they need to manage their finances well. Teach them about realistic expectations and what they can afford. Teach them about responsibility and the value of hard work. Frame your conversations in a way that is open and positive. Instead of saying, "We can't afford anything because we never have enough money," you could say, "Let's do something within our budget. Let's think of something unusual and creative to do this weekend." Your best teaching moments come from regular activities like grocery shopping, paying bills, or planning a family holiday. The planning can be just as exciting as the actual activity, so get them involved with it.

Number eleven: tying all of their fun activities to money. Vacations, visits to amusement parks, going to the movies, or eating out at restaurants are expensive activities that should be saved for special occasions. When everything you do with your kids is tied to money, you're teaching them they have to spend it in order to have fun, relaxing moments, or make memories. The happiness and value an activity brings shouldn't be tied to the cost, and you don't want them to be entitled kids who expect outings to be always grand and over the top. When you show them that they can have just as much fun visiting a local park, going to free events at the library, hosting home movie nights, making crafts, or exploring nature, well, they'll take those activities with them throughout their whole lives. They’ll grow up to be adults who are better at saving because they can entertain themselves without spending a ton of money. They’ll know they're not missing out when they have to make sacrifices because they can have a great day at the park playing frisbee or volleyball with their friends.

Number twelve: impulse buying. When you buy something on a whim, your children learn that spending like that is a normal and acceptable way to manage your money. They also see that you get happy by buying material things, and that can make them think you have to spend money to buy happiness. They need to learn it is not easy to afford anything at any time; there are financial consequences to it.

Number thirteen: giving in to the clothing and makeup epidemic. How do we say this in a way that doesn't sound so dramatic? Well, I don't know if we can. There's a buying epidemic going on, and parents are giving in to their children's demands too easily. Your kids are heavily influenced by social media, so they all want the same sneakers, clothing, even makeup pushed by these influencers. They tie these things into their overall worth; they feel like they need these things to fit in. When you buy these things for them, you're confirming that belief. We actually appreciate individual style and creativity far more than following trends. Think about the people that you admire: they bring something different and interesting to the table, don't they? They don't wear or do things just to fit in; they find the group that will stand out with them. That's what you want to teach them: that having the same things as everyone else doesn't make them more worthy or more valuable.

Number fourteen: teaching them to be polite about money. Talking about money can be awkward because there's this idea that it shows that you don't have it, you're desperate for it, or you're worried about it. But if that avoidance leads to a lack of confidence about money, well, your children are more likely to undervalue their work, accept underpayment, find it hard to say no to friends, family, or their partner who keeps asking for financial help, and feel like they need to hide the truth about their financial situation. It's through talking to people that they understand their financial situation and can see if they're behind in their financial life. These conversations can help them to make changes and fixes to put themselves in a better financial position, but they won't be able to do that if you're always teaching them to be polite and soft about it.

And number fifteen: buying things just because it's cheap. Now, you might walk into a store to buy a pair of shoes for your child and see the cheapest option and say, "That's cheap, go for that one; it's what we can afford." And then a few weeks later, you're back in the same place because all the shoes you bought have already broken. Show your child that buying something that's good quality will last longer and give you a better cost per use than buying something cheap that will break quickly. Show them that it's better to save your money and put a little bit away each month to be able to afford the quality shoes rather than making an expensive purchase in one go or going for something that just simply won't last.

And since you stuck with us until the end, we do have a bonus for you. Today's bonus is not preparing properly before your child is born. Before you could teach your children about money, well, you need to refine your own financial literacy. You need to learn the lessons of making money, investing, and reducing your expenses. You need to understand how much more your children learn from watching your behavior and bad habits than they do from the things you tell them. You also need to put yourself in the best financial position possible so that you're not always worried or stressed about money and putting this stress onto them without even realizing it. Create a detailed financial map of your child's future. Managing money is about your planning and action more than it's about what comes into your bank account every month. If you're worried or stressed about money when you have children, or you're confused or shocked about how expensive it is, well then, you haven't planned properly. Get your PowerPoint presentation out, your spreadsheet budget, or your hand-drawn map, whatever you need, and make sure you've planned out the next two decades.

It's understandable, you don't want your kids to make the same mistakes that you did. But if you keep making the mistakes yourself, well, you can't expect them to do much better. Your child's financial freedom, hey Luxer, it starts with you. Every decision you make, every habit you exhibit, and every word you say about money forms the blueprint of your child's financial psyche. It's not just about avoiding debt or saving for a rainy day; it's about teaching your children the value of money, the importance of financial planning, and the skills to navigate their financial future confidently.

Stay wise, stay healthy, and until next time, Alexa. Remember, the future isn't just something you inherit. No, no, the future is something you create.