Teaching Debt Solutions From A Young Age?

By Author: Jennifer Baxt
Total Articles: 200
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These days, it seems that people are getting into debt at a younger and younger age. Studies show that by the age of 20, many people already have a large amount of debt under their belts. That debt only seems to grow with age, especially when they begin to get student loans, mortgages and car loans. Is there a way to stop this? Is there a way to make it so that young people are not saddled with debt from a young age?

By teaching ways to manage and avoid debt at a young age, it is possible to keep young people from falling into a debt spiral before they can even drink in bars legally. Here are some tips to get you and your kids on the right track with debt.

First, have your kids start living by a budget. This will be very easy because at an early age, especially before the age of 15, there are very few expenses for young people. On top of that, there is little income for them as well. The point is not that you need to have a lot of information in the budget, but that you are teaching the kids to use the budget. Teaching the kids to use a budget at a very early age will keep them from letting their expenses get out ...
... of control. That way, you will be able to not only help them manage their money, but you will teach them one of the most important things you can learn to keep away from debt.

The next most important thing you can teach them is how credit works. The problem with many young people and credit is that when they get it, they go a bit out of control with it. As a result, they can find their credit card is out of control before they have a chance to bring it under control. Sometimes, a first credit is the beginning of an unstoppable debt spiral. With very young children, give them a pretend credit card that they can use around the house. You can also incorporate a credit card (fake one) with the allowance so that they begin to understand paying back the credit card. It may be a game early on, but it can help out by giving your kids the skills they need to understand how credit works for them, and against them as well.

Lastly, teach kids about saving money. By having them put away a certain amount of money each time they get their allowance, they can see their savings grow. This is a very good idea if you want to teach them the value of a dollar.

Saving money, having a budget and learning about credit at a young age is something that kids need to learn before things get out of control in young adult years. Sometimes new money or credit can be overwhelming in the temptation to spend, but you can prevent that from happening with some good credit and financial tips.

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