Teach Your Child to Manage Debt

A Lannister Always Pays His Debts…
And You Should Too.

As much as we might try to avoid it, chances are we owe some money to someone.  80% of American adults carry debt, often in the form of a mortgage to purchase a home, student loans to pay for a dream college or credit card bills to cover monthly needs and wants.   

If the vast majority of us borrow money to pay for things both big and small, there is little doubt that kids need to get a grip on the good, the bad and the ugly of borrowing while they are still young. 

But how do we teach children to manage debt?

break it down to practice and participation. 

• Let kids practice borrowing money from their grown-up for small wants, but be sure to keep them accountable for repaying their debts. A signed IOU can help kids map out their repayment plan, which should happen in regular, small increments (most likely coming out of their allowance). We also recommend charging a bit of interest so kids learn early on that you paid more for something with borrowed dollars!

• Let kids participate in the conversation when the mortgage bill shows up, the student loan statement arrives or the credit card payment is due. (Of course, we don’t recommend giving kids full disclosure!) However, by simply acknowledging the debts adults face and giving insight into how they plan to pay them off, kids can start to understand how financial choices made at a young age can have lasting effects.

You carry your first name, your pet peeves…and your credit score with you throughout your life.  Let’s not let our kids go out into the world without the resources they need to make smart financial decisions that will impact their future.  Our debt guide dives deep into debt so that today’s little borrowers will become money-savvy consumers as they grow.