4 things you're doing today that affect your child's wealth tomorrow

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A lot of new parents worry that they'll screw up their kids — that they'll raise unlovable, unconscientious, and generally dysfunctional brats.

We thought it would be nice to add one more worry to that list (you're welcome): The possibility of raising a kid who has no idea how to handle money when they grow up.

Because, according to Scott Moffitt, owner and financial planner at Summitt Financial Group, parents are "the most prominent example that kids of have of how money is managed." And, he added, most parents don't realize how much influence they have in that area.

We asked Moffitt and Meri Wallace, a child and family therapist, about some ways in which parents affect their kids' money-management style as adults, for both the good and the bad. Here's what they told us.

1. Parents who are financially reckless can be poor role models for their kids

Both Wallace and Moffitt said kids watch and hear everything — even when you think they're not paying attention. In fact, Moffitt said the most important thing to keep in mind in terms of cultivating good financial habits in your kids is how you handle money.

"Parents who spend a lot or always overspend don't demonstrate how to have a budget or work with money," Wallace said. And if you go into debt, they'll eventually hear about it.

2. Parents who never tell their kids 'no' set the stage for overspending

Some parents, Wallace said, feel like they can't say 'no' to their kids. Maybe that's because they're working or traveling all the time and feel guilty. Or maybe their family didn't have a lot of money when they were growing up, and they want their kids to have the opposite experience.

But by giving into their kids' every request, these parents are "demonstrating that anything you want — you can just go get it," Wallace said.

When the kids grow up, she added, they might feel like they're entitled to everything. As a result, they could wind up overspending and going into debt. They might even get angry with their partner for not getting them the exact gift that they wanted.

"It's okay for kids to want," Wallace said. But parents go wrong in thinking they either have to give them everything or say, "How could you want anything else?"

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3. Parents who give their kids an allowance cultivate fiscal responsibility

Moffitt said kids who receive an allowance learn to work for things — for example, maybe they earn an allowance in exchange for doing certain chores. They also start to appreciate what things cost and have the opportunity to choose how they want to spend their funds.

These are all "great ways of demonstrating fiscal responsibility at an early age," Moffitt said.

A similar way to give kids limited financial responsibility is to give teenagers an ATM card or a low-credit-limit credit card. That way, Moffitt said, "when they do go off on their own, it's not their first experience" managing their own money.

4. Parents who include their kids in the college conversation expose their kids to financial realities

If you work with a financial professional, Moffitt said it's a great idea to bring your kid along to certain meetings — especially when you're talking about paying for college.

That way, the kid will be better equipped to understand why they can't attend a college that's halfway across the country and costs upwards of $40,000 a year, when there's a great public university closer to home.

"Number one, it's their college experience," Moffitt said. "Secondly, it gives them that practical experience of, this is the way the world works. This is what things cost."

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