All parents want to do what's best for their child. The question is: What is considered "best" for their kids.
Some parents believe in "sparing the rod and spoiling the child", some believe that their kid having a happy childhood is more important. Some want their kids to have all the creature comforts they could possibly desire including iPhones and iPads, while others think it’s more important to teach their kids the importance of earning their rewards.
But nobody wants their child to not be able to handle their own finances when they grow up. Here are three things parents might be doing that could turn their kid into a financial disaster:
1. Buying their child everything he asks for
Kids these days want a lot more than just Legos or the latest Disney princess figurines. A majority of parents know not to give in to their every kid's whims and fancies. Even if not for the fact that it would drain their retirement fund paying for all the iPads, X-boxes and electric scooters, buying every single thing their kid asks for also run the risk of raising a spoiled child who has to have everything he wants right now.
But the fact is, all these head knowledge flies out the window the moment their kid is rolling on the ground throwing a massive temper tantrums in the middle of Toys R'Us when they say no to what he wants. Caving in to everything a kid wants is the most counterproductive thing a parent can do at that point.
This is because one of the biggest lessons in managing money is of Delayed Gratification. Kids should learn that it's important to save for the future for "better" things instead of spending all their cash all the time on what they want now. By not teaching a child to take “no” for an answer, it could turn him into the sort of adult who has no self-control in a shopping mall, and no sense of being financially prudent in life.
2. Encouraging their child to enjoy the high life
Some parents think that by giving their kids an appreciation of the finer things in life, they’re motivating them to work hard for their own future. The irony is that it's usually poverty that motivates people to want to work hard and rid themselves of their current situation. It drives them to want to manage their finances better.
Riches that's been doled out for free by doting parents are not going to spur someone to work hard and better himself. That being said, it's not wrong to want to teach your kid to aspire for a life free from financial woes.
But how about instead encouraging your kids to live lavishly, show them how to enjoy the simple things in life instead. Spend time with them instead of buying them more stuff, encourage them to give back instead of taking things. Then, you can rest assured that your beloved son is going to spend on the important things in life instead of fancy cars to impress chicks.
3. Telling their child he’ll inherit your wealth in future
Remember that scene where Mufasa tells Simba “One day son, all this will be yours?” Pull that stunt in Singapore and you can bet every kid will be twiddling their thumbs until the day their human ATM drops dead.
When parents do that, they’re sending out the message that their child will be financially taken care of in future. Even the inheritance of a simple HDB flat can be a huge financial boon, given the high cost of property in Singapore. No matter that that's not the intention in the first place, It still subconsciously plants the mindset of "why bother to work hard when there’s going to money coming my way in a couple of decades?" in a child.
Save that conversation for when the child is in his twenties or thirties, when he's more mature, and when he has already learnt the value of hard work and financial discipline (most likely from his first job).