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Parents' Top 10 Money Mistakes

The Most Common Financial Errors and How to Avoid Them

By Beth Skarupa

Rather than allowing our children to pick up our bad money habits, we have a responsibility to teach them where money comes from – and that's from work. Ramsey says it's a positive experience for children to have an opportunity to earn money by doing some kind of work – at age-appropriate levels – and for them to be able to give, save and spend the money they earn.

9. Not Having Life Insurance

Ramsey recommends about 10 times your income, 15- to 20-year level term life insurance. And that goes for stay-at-home moms too. "If Mom passes away, there's a huge economic value that has to be covered that she brings," Ramsey says. "She's the taxi, the cook, the nurse-maid ... she's all of those things and all of those things will take $30,000 to $40,000 a year to replace."

Most financial advisers say it's better not to pay off your house because you get a tax deduction for it. "Basically, if you have a $10,000 tax deduction for interest, it saved you only $3,000 in taxes because it only lowered your income by $10,000," Ramsey says. "And so, what you're doing effectively is sending the bank $10,000 to keep from sending Washington $3,000. This is a bad plan. You're much better off to have paid for [your] home. It stabilizes the family in ways that can't even be described."

* Last name withheld to protect privacy.