3 Things Your Money Habits Teach Your Kids

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Many parents believe that teaching their children to appreciate money comes down to teaching them what they should and shouldn’t do. But actually, the way you handle your own finances is the biggest indicator of how children will ultimately handle their own finances.

“Children are like little VCRs – they are constantly watching and absorbing their parents’ money habits, often more than we realize,” said Ruchi Pinniger, financial coach and founder of Watch Her Prosper.

She said even the simplest everyday actions, like paying bills or grocery shopping, play a big role in how children think and feel about money.

“A 2020 study showed that this ‘parental financial model’ is one of the most important ways children learn to manage finances as adults.”

Below are the most important things your money habits teach your children.

Reward-oriented or stress shopping

“The practice of buying children gifts as a reward for achieving their goals encourages children to purchase when they desire emotional highs,” said Steve Carleton, LCSW, CAS, chief clinical officer at Porch Light Health.

“This can cause children to become reward-oriented and expect a reward whenever they accomplish something, which can make them feel like their worth and happiness depends on things.”

He said this learned behavior of feeling good about spending money can eventually become a part of them, affecting how they manage their emotions later in life.

“As these children grow up, the tendency may develop to seek relief whenever there is tension.

“Their challenges or depression may lead them to spend money to recover from their worries or to feel better.”

The negative aspect of this, Carleton explained, is the fact that such an attitude toward shopping may prevent them from learning other healthier methods of regulating their emotions and dealing with difficulties.

“After that, things will be temporarily quiet, creating a vicious cycle of spending stress and stress that takes both emotional and financial toll.”

In addition, there is a likelihood that compulsive buying behavior could develop due to the habit of spending money to celebrate one’s successes, he said.

“If such consumers imagine shopping as a reward every time they deserve it for some reason, then they will tend to buy anything, regardless of cost, and without any plan or control.”

He pointed out that such practices can be harmful, especially as children grow up and become responsible adults, due to the need for proper organization and management of one’s finances.

“Parents must help prevent these patterns from developing by instilling in their children a respect for money and encouraging other forms of reward to promote personal satisfaction beyond buying, especially among teenagers and young adults.”

Relying on other people’s money to make ends meet

“I’ve seen clients carry messages from their childhood with them for decades – like one client who realized she had been living with the belief that she couldn’t make it without her father’s money,” Pinniger said.

“It held her back in business until she uncovered and published this old story. When she did that, her earnings skyrocketed.”

Talk negatively about money

According to Pinniger, you should avoid talking negatively about money.

For example, saying that having too much money is bad or that “there are always more bills to pay” sends negative messages to a child.

“The way we talk to our children about money shapes their beliefs for years to come. When they see us approach money with intention and clarity, they learn to see money as a tool that can be used for security, well-being and prosperity – rather than something to be afraid or worried about.” said Pinniger.

Advice for parents

Experts noted that it’s not just what children see that matters, but also how they feel.

“When there is warmth, trust and open communication at home, children are more likely to develop healthy financial habits,” Pinniger said.

“Every moment you interact with money is an opportunity to model positive behaviors that will shape your child’s financial future. It’s about showing them that money isn’t something to worry about or hide from – it’s a tool to support their wellbeing and growth.”

She noted that parents don’t have to be perfect with money to be good role models.

“It’s about being aware and open and making it clear to your children that managing money is about choices, setting goals and understanding its essential role in our lives.

“Every interaction with money is an opportunity to teach and demonstrate a healthy financial mindset.”