Children can get themselves into some cracking financial disasters. Be they 5, 15, or 35, children's financial woes can be tricky for parents.
Problem behaviour around money takes many forms. It's not uncommon for parents to arrive at ToughLove New Zealand parenting meetings to discuss children who are manipulative around money.
Others have children who dig themselves into a financial hole with expenses they can't meet. One example, says ToughLove board member Peter Altmann, is the child who gets his or her first car and builds up a stack of fines. The parents pay the fines and the child learns nothing.
The Parenting Place's creative producer, John Cowan, sees cases of "Trade Me-itis" where the child is using the parent's credit card without permission to buy goods on the auction website. He has seen cases, as well, where children take cash out with a parent's eftpos card when paying for groceries or other goods.
The child's behaviour may be problematic, says Altmann, because he or she has spent pocket money or savings irresponsibly. Or they have racked up ridiculous amounts of credit as soon as they got old enough to get their fingers on it. ToughLove also sees cases of children who have behaved criminally - sometimes taking cheques from parents' chequebooks, or worse.
Some children can become aggressive or violent in their demands for money, says Cowan. Even adult children can threaten parents. "Mum and Dad have enough money to pay my debts/rent/car." The parents are then threatened, perhaps with violence. In the case of elder abuse, some of the worst perpetrators are the elderly person's own children.
One of the problems with children and money is that most people - adults and children alike - justify their behaviour to themselves. They say "I need" a new evening dress, or mag wheels, then buy whatever it is on hire purchase or a store card. Because they "needed" the item the behaviour is normalised. "Everyone has credit card debt, don't they?" Because the behaviour has been justified the children keep spending and expect Mum and Dad to pick up the pieces.
If parents buy the excuses, they're ensuring the problem continues and the child or adult is not encouraged to change his or her ways.
It's always interesting when two children from the same family can have very different attitudes to money (and everything else in life).
Prevention is always better than cure. All three interviewees for this article said adults were often responsible for the children's financial problems. I've written before about the many ways to educate children about money.
The question is what can parents do if they've Passed Go without educating their children about the sensible use of money? It's never too late to start. Parenting and financial experts have many suggestions, including:
* Give them advice, but let them fail. Parents want to protect their children from the big bad world. Yet they're perpetuating the problem if they dig the children out of a hole. Making mistakes and learning from them is part of growing up. As Andrew Lendnal, financial planner and author of Gold Start, Teaching your children about money, says, Mum and Dad won't always be around to save the children.
Even if the kids inherit a sum of money they'll blow it if they have a history of poor financial decision-making.
"You need to let them fall on their own swords. That way they will get a wake-up call," says Lendnal.
"It's a bit like someone with an alcohol problem. They get to rock bottom and realise they need to go to Alcoholics Anonymous." Parents can't shelter their children from life's inevitabilities forever.
* Don't make excuses for them. Excuses teach children to avoid their responsibilities. "Charlotte is in debt because she doesn't earn enough so I'll give her some money," isn't going to do Charlotte any good whatsoever. "It's too hard for Tom and Sylvia to buy their first house." Tom and Sylvia only have to pay 5 per cent interest on their home loan compared to their parents who bought in the 1980s at 18 per cent interest.
* Parents are not responsible for children's decisions. Sitting back and letting them experience the consequences is the best thing many parents can do for their children's long-term wealth. If the problems are mismanagement then parents need to step back. Parents may be more inclined, however, to help the child who has a one-off problem rather than habitual poor money behaviour.
* Buying things and paying off debts doesn't make children happy. "You are creating the opposite effect," says Lendnal. They will believe that they only need to be good when they want something, and just come to expect more.
* Consider lending, not giving. Make sure, says Altmann, that you have a repayment plan in place before you give money. Take time to think about it. What's more, don't give cash - it may be diverted or misused. Pay the debt instead. If the loan involves the child agreeing to some kind of work, make sure that the work is done before the loan or gift of money is handed over.
* Only lend money when children start to act responsibly. The lending can be tied to acts such as going to a budgeting adviser, cutting up credit cards so that they can't spend more, or writing a budget. This only works, however, if the child chooses to follow this route, and not is induced to. If you do lend, make sure the money is paid back, says Cowan, or be prepared to take the item away and sell it. Parents are less harsh than the bank, but the lesson is learned.
* Review children's budgets and bank statements. If they want money they will need to be open about their spending. Don't moralise. It will be counterproductive.
* Talk. One of the best ways to stunt a child's financial growth is not to talk to them about money. Yet many parents avoid talking to their children about money because they don't understand money themselves, says Lendnal. Talking about mistakes - what you could have done better and how you got yourself out of a tricky situation - can demonstrate a better way to children.
* Don't fall for emotional blackmail. "If you loved me you would lend me this money." "You gave my brother/sister money, so why can't you give me what I want?" "I'll get a bad credit rating if you don't." These are all emotional blackmail. Conversely, don't use money to blackmail your children.
* Don't try to control your children's lives. Talk them through the issues, but leave them to make their decisions.
* Stand up to betrayal of trust. Praise them when they are trustworthy and make the consequences real if they're not. That can be difficult, says Lendnal, these days. Take the Nintendo DS away and they'll play with their laptop or iPod instead. Cowan talks about a "V of life", with most freedom at the top of the V. If the children betray your trust, retreat down the V and give them less freedom until they prove themselves trustworthy. In particularly bad cases it may be worth involving the police.
* Dropping them in it is character-building. "Teenagers who have to struggle a little and work a lot ultimately have more self-esteem and better life skills than those who get handed everything on a plate," says Cowan.
* Get help. Go to the Parenting Place, join ToughLove, take the child to a psychotherapist or psychologist, visit a budget or financial adviser, or do all of these.
* Beware. Parents can and do get themselves into financial problems by trying to help their children. The most common example is where they act as guarantor for the child's home loan, business, car loan or other lending. Often the bank takes unlimited liability, meaning the parents could lose their home if the child fails to keep up payments. If that money represents some aspect of your future security, says Cowan, beware of lending it.