I like to be around people who don't constantly emphasize their every word, making it hard to tell when something is actually important. Since swearing is a verbal marker of importance, its casual overuse is like shouting all the time; it's very wearying. And, lest I be accused of rationalising, I do not only apply this to children, but have also asked my wife to cut back on swearing. As a side note, Americans are very loud, both in the literal sense of putting more decibels behind their voices, and in their over-reliance on swearing. I think you've fallen into the bad equilibrium that comes about when everyone has an incentive to be a little louder than the next guy, and there's no cost to being so.

Or you could, y'know, try to think of a better way. That you know what a policy of punishing swearing develops into ("don't swear in presence of adult people or someone who would inform them") shows that you have the ability to think forwards into the consequences, but also hints at some sort of stopping, perhaps motivated (because hey, finding better solutions is hard). Clearly, you also have the ability to reason a bit further: What sort of microsociety does the above behavior encourage once they get into high school, where the majority of their perceivable world is a miniature scheduled wildland? When I was six and used swear words in front of my school principal (hey, when you spend half the day in the principal's office for the 13th time, you kinda get used to someone), he later brought it up with my parents (though I vaguely recall it wasn't in any negative manner). My parents immediately started reprimanding me, naturally, but he stopped them, and afterwards they changed strategies based on his advice and some insight they gained from reading more research and books on related topics. I'm certainly glad they did, in retrospect, because in the twisted social environment that high schools are, a good swearing strategy can be extremely effective. I don't know how widely this'd work, YMMV and all that, but a "leave me alone" usually didn't get prospective bullies off my back. If I then followed up with a steady gaze and a "leave me the fuck alone" (yes, I know, but that's how 14-year-olds talked when I was there), now suddenly they'd grow much more cautious and start re-evaluating whether they should still try to play their little status game and get their cheap fun, when someone who rarely ever swears had just signaled to them that shit got serious. All in all, "never swear" seems to me like it never actually works, and takes much more effort to attempt (by punishing every single instance of swearing that you can find, even though you know you can only find