Don’t model these 4 bad money habits for your kids

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As parents, we’re constantly being presented with opinions on how to raise our kids. But when it comes to family finances, I find people are slower to give advice. Of course, as The Wealth Builder, it’s my job to help you and your kids build wealth!

The way you treat money may be the way your kids will learn to treat money. (Although the opposite can be true, as well. My editor saw her parents’ money mistakes and does the complete opposite.)

So if you’re a spendthrift or you’re hopeless at paying bills on time or you rack up credit card debt, here are a few things to avoid saying to your kids:

1. ‘Shh!!! We don’t talk about that!’

Don’t treat money as a taboo subject.

Maybe some parents don’t like to talk about money with their kids. Me? Whenever our 16-year-old son asks a question — “Mom, how much do you make?” “Who makes more, you or daddy?” “Are we rich?” — I always answer.

By the way, my answer to No. 3 is, “The rich people live in the fancy building NEXT to ours. We’re not rich — but we have enough to buy whatever we want to buy as well as everything we need.” Sometimes I feel rich because of that.

Tip on feeling rich: Have a stash of cash you have ready access to. Need a new dishwasher or just feel like a three-day getaway? We keep a savings account for small luxuries as well as emergencies.

2. ‘Well, maybe we can afford that if we put off other things …’

Don’t be vague about your money values. Every family makes trade-offs. There’s nothing wrong with saying, “A (in my son’s case – another pair of shoes) doesn’t fit into our budget. You’ve already gotten four pairs of sneakers this year.”

Maybe you’re saving for college someday. You might have a weekend trip that everyone looks forward to, but paying for it requires cost-cutting elsewhere. Explain to your kids that most things in life require a trade-off. Cut here, so you can spend there.

A Certified Financial Planner professional can help you manage these decisions as well as how to create a plan to get that summer getaway and pay for college.

3. ‘Of course! We always …’

Some families have their automatic, regular expenditures: a new car every two or three years, annual shoe shopping at a high-end store, the annual spring break trip or weekly dinner out.

We have regular discussions on what we’d like to spend money on, and we look at what else is going on. The year we bought a car and had a bar mitzvah, we cut back on clothes shopping and dinners out. When my husband switched to a freelance career, we realized we could live without a membership to a museum we all like.

Auto purchases can be budget-killers, especially if circumstances shift. Put that money to work in a high-yield CD or money market account instead.

4. ‘I bought this because I was feeling down.’

Be wary of regularly cheering yourself up with some retail therapy. Your kids may learn to motivate and reward themselves with shopping splurges. Not a good financial habit.

The occasional purchase (either to motivate or reward yourself or your kids) is fine, but keep it small.

Plan your purchases — and use a rewards card to add some muscle to your spending. Scout out the best credit cards for cash back or points to use on travel.

But remember

As parents, we’re all doing the best we can. If a couple of these lines come out of your mouth, don’t sweat it.

Tip of the week: Stay in the game

Slipping into bad habits when you retire is easy: Sleeping late, watching too much TV, not exercising.

Don’t want to make yourself obsolete? “Stay current,” says Ken Dychtwald, a Los Angeles gerontologist and expert on aging-related issues.

Keep up with fashion, current technology, music. “When people don’t stay current, it’s like casting yourself to a back-in-the-day village,” Dychtwald says.

Just dive in, and don’t be anxious about your age — and try to remember that people all ages often face stereotyping.

“If you want to understand what young people are all about, you have to make friends with younger people,” Dychtwald says.

Aside from your own kids and grandkids, the workplace is a terrific place to make some friends with younger people. Or go to the Apple Store and learn about new tech. Go to the community college and take a few courses. Go to concerts and music events and gatherings that people of other ages go to. Read the blogs of younger generations, not just the ones people your own age would be drawn to.

But most of all, Dychtwald recommends remaining open-minded. Drop your long-held perceptions, and try to walk a mile in a younger person’s shoes.

How to know if a rollover is right

Recently in Bankrate’s exclusive Money Masters Facebook group, a reader asked about rolling over a 401(k) from a former employer into an IRA on an adviser’s recommendation.

In short, the best reasons to roll over a 401(k) into an IRA or into a current workplace plan are to

  • Pay lower fees.
  • Consolidate assets so there’s one less thing to think about.
  • Access different investment options.

If you’re risk-adverse, you might consider looking into high-yield CD accounts.

Join us at Money Masters, so you can ask questions and get personalized advice from some of the sharpest minds in personal finance.

Follow me on Twitter: @jill_cornfield

Jill Cornfield

I'm a reporter at Bankrate, talking retirement – my own as well as yours. Sign up for my free newsletter.