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5 Worst Money Mistakes

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Despite the best intentions, moms and dads sometimes give kids the wrong idea when it comes to finances. Key ways we often goof:

• We send mixed messages about money. You tell your daughter you can't afford a toy she covets to avoid a meltdown at the mall but buy yourself a new outfit while you're there. We should not only tell our children what our values about money are but also "explain our actions when they seem to be at odds with these values," says Eileen Gallo, Ph.D., coauthor with her husband, Jon, of Silver Spoon Kids: How Successful Parents Raise Responsible Children.

• We don't distinguish between needs and wants. If you consistently give in to pleas for, say, $90 designer sneakers when a $29.99 pair will do, your child won't learn how to resist the latest consumer status symbols. "Kids also need to learn that buying something that's expensive when a less-costly item will do robs you of money you could use for something else," says Paul Richard, executive director of the Institute of Consumer Financial Education, in San Diego.

• We rescue our kids when they make a financial blunder. If Junior blows his allowance the day he receives it, resist an advance on next week's payment. Instead, let him feel the pain of doing without the candy, toy, or other prized item he might have been able to buy had he done a better job of managing his money. "If we always bail out our children when they mess up, they won't learn important lessons about living within their means," says Ann Douglas, coauthor of Family Finance: The Essential Guide for Parents.

• We put a price tag on everything. If you tell your daughter you can't go to her soccer game because "someone in this family has to pay the bills," you send a negative message about what's important in life. If you give her $5 for every A that she gets on her report card, you fail to provide the right motivation for working hard in school: the self-satisfaction that comes with doing one's best and achieving a goal, regardless of the potential for immediate financial gain.

• We use money as a substitute for time and love. No parent wakes up in the morning and says, "I want to spoil my kids rotten." Yet that's what we risk doing if we constantly overindulge because it's quicker and easier to give in than to say no or because it's a shorthand way to show we care. As every good parent knows (but is sometimes too tired to act on), the greatest gift you can give your child isn't more stuff  -- it's your love.

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