Explaining to children?

Scottishmummy · 17 July 2013 at 9:52PM

Are there any decent sources out there on how to explain debt to children? We have three children, the oldest of which will shortly be turning 14. He is at the stage of constantly asking for stuff which, no matter how often we say we can't afford it, it just doesn't sink in.

He has a mobile which is just literally a phone but that isn't good enough, he wants an iphone or android. He bought himself an ipod a couple of years ago with birthday money so its not like he can't access all of the apps already. Clothing is the latest bone of contention. He skateboards so jeans, hoodies, shoes etc tend to get ruined pretty quickly so I don't buy any item of clothing that costs more than £20, more often closer to £10. He has started looking online at things like shoes that cost £25 and hoodies at £50:eek:.
We have sat down with both him and middle child and explained what we earn and what goes out before we even do any food or clothes shopping but that has made no difference. We explained our stepchange payment as paying off a loan but did not discuss that further. I am now wondering if we should explain, to him at least, that it is actually an accumulation of debts that we built up over a period of time that we have already spent 10 years repaying and will still be paying for another 18 years at least. Stepchange actually have it down as another 30 years but our mortgage will be clear in 10 so that money will bring the term down quicker.

So what would/have you done regards explaining to children?

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Vikipollard · 17 July 2013 at 10:05PM

I told my kids everything, warts and all about running up a £10k credit card debt and the consolidation loans which never worked (for me) to the tune of almost £10k. Not on frivolities, just day to day living.

I explained how I'd hidden the debt from my OH (their stepdad) until it was at crisis point and how it had nearly destroyed us. And they had seen the strain.

I told them in glorious technicolor what the solution had been (an IVA), what that meant and exactly how much money I had to budget with.

They were 13 and 14 when I told them.

The youngest graduates from University next week and I'm proud to be able to say learning to budget allowed us to support him financially despite the IVA.

I should add that he refused to have the credit card that was offered with his Student bank account, has no overdraft and has £3000 in savings. He has budgetted every week since he went three years ago and does not believe he has missed out by doing so. The eldest has no credit card and is saving for a deposit for a property.

For me, that alone is a result which I hope being completely honest assisted.

Whatever you decide to do, you know your kids best. It might be harsh to do what I did, but I have no regrets.

theoretica · 17 July 2013 at 10:56PM

Is this any use? http://www.moneysavingexpert.com/family/Teenagers-cash-class

Also, can you get him living above his means through charity shops? Handling his own budget? Even without handing the money over you could have a spreadsheet/spending diary for him and a nominated budget to work within and discuss prioritisation.

phizzimum · 17 July 2013 at 11:06PM

when I was growing up my Dad had got into quite a bit of debt but it was never explained to us kids. I just knew that we had no money! He was always sitting us down and lecturing us. I really felt guilty and thought that our money worries were because I'd left the lights on or eaten too many biscuits. It was only years afterwards that I realised he'd got into debt and squandered the money on silly things. It made me doubly angry because I'd felt to blame. I've had a very warped view of money over the years, and its something that I have to work on personally. So I would suggest being honest and up front.

Bennifred · 17 July 2013 at 11:12PM

Your eldest boy is old enough to get a paper round - he could then save up for things he wants rather than needs. It would also help him to equate effort/work with income, and learn to value what he has.

chevalier · 17 July 2013 at 11:46PM

When I was 12 my mum sat me down and said right I am giving you your child benefit. Out of that I had to buy EVERYTHING except school uniform. I soon learned that I had to save for stuff if it was expensive. Would this work for your boy?

Alternatively find the brands that he is looking for online, and show him the same things on ebay (hopefully cheaper). Ask him what he is going to sell of his stuff to get these expensive things.

One thing my SIL did with her boys was say I can get a decent pair of trainers for you for 20 pounds. If you want the 50 pound ones then you find the money for the difference. This worked well for them.

But yes I would also tell them in detail about the debt. Show them your SOA that you did for Stepchange. And then explain that when you say you can't afford it you really can't. It isn't something you say to fob him off, it is the truth.

It will be hard for him. But I am sure it will help in the long run
chev

Scottishmummy · 17 July 2013 at 11:57PM

Thank's everyone

Vikipollard - that is my hope that they'll grow up with no bad debt and live within their means.

Theoretica - that link is exactly the sort of thing I was meaning - now why couldn't I find it. Unfortunately no charity shops without making a special journey and they never seem to have anything suitable - they tend to only have clothes I would describe as for the over 60's. I go have a look when I have dental appointments as in the same town but have only once ever found anything for myself, never mind the kids.

Phizzimum - I sincerely hope our kids don't feel like that. Our debt is mainly due to being made redundant after buying a house that needed a lot of work done on it - the only way we could afford to move out of a two bed flat so I feel fairly secure in that the bulk of the debt is not due to squandering. I'm sure there probably was some but we don't smoke, don't drink, still have an old style TV and run a 14yo old car that is nearing the 200k mileage mark. I do have quite a large book collection but I haven't bought any other than for presents for the kids for years and tend to reread them fairly often. My favourite is falling apart I have read it so often.

Bennifred - his name is on the waiting list at the local shop but I did suggest he go see the local butcher as that is the only other place that might have something for him but he didn't get around to doing anything while he helped his dad with some repairs to the house and now there are only three weeks of the holidays left he thinks it's not worth it. At least once back at school he could try some of the places in that town and would only have the busfare home to pay for if after school rather than both ways during the holidays.

Scottishmummy · 18 July 2013 at 12:07AM

Chevalier - that would be my ideal to give him his child benefit but at the moment that money is needed for day to day living. I had my hours cut at work in April, however hopefully they will go back up again in September so the possibility is there. At the moment all we can afford to give him is £5 credit on his phone and £5 into his bank account every month. We will also pay for him to go into town once a month to go a bigger skate park with his mates.

He sold quite a lot of stuff he no longer uses at a car boot sale a couple of months back so that he could upgrade his skateboard. I think we would be scraping the barrel to find other things worth selling.

We are just going to have to sit them down and tell them aren't we. Oh well I have friday off so I think I'll just make sure our latest stepchange budget planner is still accurate - should be, was only done in April when my hours were cut - and will then sit them down.

gayleygoo · 18 July 2013 at 8:52AM

A tip I've seen on here a few times is to sit down for the chat with a piece of HM cake, it seems to soften the blow! Good luck x

Cycrow · 18 July 2013 at 9:11AM

i think it would be better if he started earning money, and use that to buy the things he wants.

i never got any pocket money or anything when i was young and was doing paper rounds from the age of 10 and started part-time work at 16

bargainbetty · 18 July 2013 at 10:51AM

My mother told me flat out that if I wanted more than I needed, I needed to find a way to make money and buy it. She would provide me with the essentials, and it was up to me beyond that. I did paper rounds, entered competitions, got Saturday jobs, babysat, delivered groceries to local elderly people, anything to raise the money!

He is at an age where lots of people seems to have everything and if he doesn't it's unfair. He is also old enough to understand why he can't have everything.

Good luck

Explaining to children?

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