5 Ways You’re Hurting Your Kids Financially

By Michelle Smith GOBankingRates.com.

As a parent, protecting and providing for your child is a top priority. In addition to caring for your child's daily needs, you've probably spent countless hours thinking about how to save for your child's future. But given all that you've done, you might be surprised to learn that you could be dooming your child's financial future.

Here are five ways you are sabotaging your child's future finances.

NOT TALKING ABOUT MONEY Children who don't have conversations about money at home are less likely to understand the value of a dollar, and many of them grow up uncertain about how to manage money, according to T. Rowe Price's 2015 Parents, Kids & Money Survey.

Financial experts agree that not talking to your children about money is one of the worst parenting mistakes you can make.

Even if talking about the family's finances makes you uneasy, you should still make an effort to teach basic personal finance skills. If you avoid the topic, you could be depriving your children of essential life skills that will help them avoid debt and low credit scores.

BEING A POOR EXAMPLE Good financial habits start with good financial modeling by parents, said Sean Moore, a financial planner and founder of SMART College Funding. Most parents know they should be good financial role models, but many aren't.

Some parents still have poor money habits and troubled finances, and their children pick up that. Nearly 1 in 5 parents in a Bank of America-USA Today report admitted they don't follow the advice they give their kids. Meanwhile, nearly 3 in 5 kids said their parents' advice and the example they set most influenced how they handle their finances today.

HIDING YOUR ARGUMENTS OVER MONEY Adults have a tendency to shield their children from arguments, but arguing about money in front of your kids can be beneficial. Children who witness their parents' financial disputes are more likely to feel smart about money and more confident about what their parents taught them, according to research from T. Rowe Price.

When people argue, they usually dissect each other's views and exchange a lot of details to support or oppose their claims. All that discussion provides a lot of food for thought, which is likely one reason why most kids who witness money disputes think their parents are good financial teachers.

Besides, your children need to know financial disputes occur in healthy, loving relationships. Too many people grow up with unrealistic ideas that people who love each other shouldn't fight over money, and they often neglect issues that give root to bigger problems.

USING CARDS INSTEAD OF CASH Many children rarely, if ever, see their parents use cash. Cards are faster and more convenient, but shunning cash isn't a good idea when you're raising kids, especially when they're not up to speed about what you're doing.

Most teens don't even know the difference between credit cards and debit cards, so they're generally not going to know whether you're using your own money or credit. All they know is plastic makes things happen, and that it looks so easy, which is a dangerous mentality to foster.

When your children go to college, they'll start getting access to credit. In many cases, credit companies don't wait for young adults to come asking for credit, they make the offer. And when credit cards come rolling in, it can be a launchpad for financial problems.

College students are particularly vulnerable to consumerism. They get gratification from material things and use materials to establish self-worth and get acceptance from their peers, which tends to involve unreasonable spending habits, according to a study by Salve Regina University. And if you made plastic seem like a lifeline, chances are that's how your kids will use it, too.

NOT CLARIFYING WANTS VS. NEEDS Part of your child's problems with consumerism could be your fault. Say, for instance, you have a major presentation coming up. You're explaining how the bigwigs from corporate will be there and if all goes well you're going to get a promotion. You might say, "It's important that I make a good impression. I need to get a new suit for this presentation."

The comment might seem harmless, but it's not. For starters, you haven't identified anything that's going to help you succeed at your presentation except a new suit. Never mind skills and hard work. Your child just gets the message that if you buy nice things, you'll impress people and get what you want.

Furthermore, trying to impress executives might be a valid reason to want a new suit, but it certainly doesn't make it a need. You've blurred the lines, and it has probably happened more often than you realize. Yet, you probably expect your children to understand that most of the items they ask for aren't needs, which is counterintuitive. ___ Michelle Smith writes for GOBankingRates.com, a leading portal for personal finance news and features, offering visitors the latest information on everything from interest rates to strategies on saving money, managing a budget and getting out of debt. ___

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