Teaching Kids About Debt and Everyday Money
Matters
Children and money: these are the two words that do not really bode well with each other,
especially if you are the parent or guardian in charge of both. Often, we give little thought to
children's financial education; we just assume that they will learn how be responsible for their
own money when they grow older. (We are actually hoping that they pick some useful stuff about
money in school.)
However, their money habits, for good or bad, are developed very early on; much, much earlier than
their school years. Usually kids tend to emulate what they see and hear from the home. Children,
therefore, tend to look at money the same way you do. If you show your little munchkins that you
can handle your personal finance easily, and do not really look at money as something to be worried
about, your children will also look at money the same way.
Unfortunately, this is almost always the case - and not in a good way too. Very often, when we are
faced with money problems (like paying off debts or balancing bank overdraft, etc.) we do not show
the tykes our struggle with our finances. We assume that they are simply too young to understand
the value of money. But unless someone teaches them that, and how hard it is to earn money, and how
difficult it is to balance daily expenses, they will never really know.
The kids, in turn will grow up assuming that since cash is never really an issue at home, money
will always flow freely from parents - simply because parents are supposed to have money, and that
parents are supposed to give kids money, and that no one is supposed to be worried about its
comings and goings.
Although we are not recommending that you sit down with your kids and lay out all your money
troubles at one go, (complete with drama,) you could try more subtle approaches. First of all, you
could try explaining to them what debt is, and why you have one for the moment, if you have one.
Tell them in such a way that they will grasp the meaning of debt - that it is something that
happens, and that (hopefully) you have every intention of paying it off. Your next step is to then
explain to them the concept of saving money to pay off the debt.
You could cite more concrete examples, like telling them the actual reasons as to why you cannot
buy them that video game console for their birthday this year, or that the Christmas list will have
to be shortened somewhat.
In any case, these are the very first steps to their financial education. By showing them that
money does matter in everyday living, and that you are adult enough to inform them in such matters,
you kids just might develop a deeper appreciation as to your late nights from work, and your
tiredness during the work week. (Don't you wish your parents made the same effort for you when you
were a kid?) Plus, they get to think of money as something that must eventually be earned, and
saved.
Domingo Reyes
What if there was a legal, moral, ethical way you could pay off your 15 to 30 year mortgage in 5
year or less without using your own money to accelerate the loan payoff?
