Monkey see, monkey do. When parents behave badly with their finances, children learn by watching their parents and experimenting, not listening to hypocritical lectures.
We want to set them up for success and to fly the nest financially, preferably in their 20s, not decades later. But sometimes we're doing the exact opposite by not being good role models.
Monkey see, monkey do isn't always accurate. I remember interviewing property investor Tamzin Letele who had, at 14, written a family budget to ensure her mother could make ends meet.
But that's highly unusual. Most of us set poor financial examples and send destructive messages. Sometimes it's not even specifically about money. It could be behaviour ranging from procrastination to a cup half empty mentality, which affects the way we handle money.
Buying everything on tick
"Debt is okay" isn't a good message but it's beoming the scourge of Kiwis. Even buying on sale or second hand doesn't work if it wasn't needed or if your children see you making spur of the moment decisions.
It's better young people understand buying with HP, personal loans, credit cards, and other forms of debt is spending money you haven't earned yet and limits options in the future.
We're setting a path for of buying daily essentials or impulse purchases on tick. Showing children you're saving for something special and working with them to do the same is an invaluable life lesson.
That credit card balance
According to Canstar more than 60 per cent of credit card spending ends up incurring interest. In the old days our "balances" were called debt, which shows how normalised carrying a balance has become.
Children whose parents carry balances will most likely do the same when they get their first credit card at 18. Likewise, consolidating car and credit card debts on to the mortgage or paying for building work you can't really afford this way has become the norm. It teaches children that living beyond your means is just what we do.
Discuss your budget with them
This doesn't mean you have to tell them how much you earn if you're afraid of them telling their friends.
Instead, discuss with them how much you have to spend in certain categories, how you make ends meet in one or two categories and what they're doing to put your budget under pressure – such as leaving the lights and heaters on all the time.
Your children also need to see that you're saving regularly and have an emergency fund. If you can show them how you budget a certain amount for savings each month before you divvy up the remainder into spending categories you're giving them more than money could buy.
Don't delude yourself
It's very easy to turn a blind eye to your own spending. It's not just spending that's a problem - we lie to ourselves about other things such as that loss-making investment that we think is going to turn around or thinking that maxing out the mortgage for a better house means we've made it.
If you can talk about these concepts and share some of your more honest behaviour, children learn good lessons.
Don't rationalise bad behaviour
Good budgeting is the antithesis of this rationalisation. If you can't stand the idea of budgeting, start with a single category such as groceries, set a spending limit for the month and track it.
This should kick off some naval gazing that will ultimately benefit you and your children if you share the process with them.
There is a flipside of this and that's the poverty mentality. Both poor and not so poor children who see their parents struggling and can't do what their friends do can fall into this.
Apple founder Steve Jobs would only buy design excellence and as a result his home was sometimes lacking basics such as furniture or washing machines over extended periods of time.
When Jobs arranged to go on holiday at Oracle founder Larry Ellison's holiday home his son Reed Jobs remarked that they were going to stay with "our rich friend", totally unaware of how wealthy his own family was.