Good intentions that may have a bad impact on your child's money habits

Teaching good money habits to your kids will equip them with skills they'll need to manage financial matters as adults. Even though your intentions are good, encouraging certain tendencies can misfire and spoil your child's financial discipline.

Here is the degree of harm (on a scale of 1-5) that parents with good intent can inflict on their children.

Paying the child for household chores
It is the child’s responsibility to help around the house. By linking monetary rewards to chores, you are teaching the child to expect payment for performing his duty.

He will not only lose motivation for doing any errands at home unless linked with money, but will also start demanding higher payments for more difficult tasks.


Giving in to kids’ purchase demands
You may think it’s all right to indulge your child, but this seemingly harmless act of succumbing to pestering sends the message that it’s not important to budget or have financial discipline; that spending at will is acceptable, and impulsive purchases do not have consequences.


Bailing out kids
If you teach your child to manage his own money or achieve goals, do not intervene at any stage and help him out. It just makes him grow with the belief that there will always be a safety net and that even if he is in a financial crisis as an adult, you will be there to bail him out.


Not talking about financial crises
You may think you are doing the child a favour by not exposing him to financial problems, but you are actually making him ill-prepared to deal with them. Discussing it will teach him that financial irritants are a part of life and the entire family needs to pitch in to tide over them, if required. For instance, a child will be more willing to cut expenses or forsake pocket money if you explain why you need to save.