Your children may suffer for your financial sins, but they don't have to.
People who have declared bankruptcy were more likely to have kids who do not save any money that they get, and spend cash as soon as they receive it and expect their parents to buy them what they want, according to a new survey from T. Rowe Price. That compared less favorably to the children of people who didn't declare bankruptcy,
Fortunately, even if you have made financial mistakes in the past, you can set your children on a better path by taking these steps:
Regularly talk to your kids about money
The survey, which polled 1,014 parents of 8- to 14-year-olds and their children, found that people who discuss financial topics with their kids at least once a week were significantly more likely to have children who say they are smart about money. The numbers were 64 percent for the weekly money-talking parents compared to 41 percent for those who didn't discuss their finances with their kids.
"These conversations don't have to be earth-shattering," said Roger Young, a certified financial planner at T. Rowe Price and the father of three teenagers. "It can be as easy as talking about how you calculated a tip or what you saved when shopping at a sale or explaining why you didn't go on a bigger vacation this year."
Let your children manage their own money
Kids who have some control over their finances are less likely to spend their money as soon as they get it, expect their parents to buy them what they want, and feel ashamed that they have less than other children, according to the survey.
"Whether you give your kids an allowance or not, they have to some money to practice with," Young said.
Parents should begin conversations about finances with their children as soon as possible, said Lynnette Khalfani-Cox, a financial advisor, a mother of three and author of the "The Millionaire Kids Club" book series.
"It's never too early to start," Khalfani-Cox said. "When they ask about the coins and bills in your wallet as a toddler, it's time to talk about money with them."
Keep it simple
Kids need to know that there are four basic things you can do with money — save it, spend it, invest it and donate it — and you should discuss all those aspects of finance, said Khalfani-Cox. She uses a piggy bank with four chambers, one for each action, to help her children think about their financial priorities.
"Young kids only see us spending money at the store, so if you don't talk to them, they think money is just to buy stuff," Khalfani-Cox said.