How do we make sure our children don't get into debt?

RainManSam

neverdespairgirl wrote: »

Debt can be useful, RainManSam, it can be an investment. I've had two types of debt in my life - student debt (which was an investment in my education) and mortgage (for our home). They aren't as pointless as debt-for-stuff is.

Yes, but I'd assume that goes without saying.

Even a credit card can be useful if used wisely.

foxgloves

What an interesting thread! My parents were sensible with money when I was growing up & never borrowed or had debt, except for their mortgage. I found a part time job after school, aged 15, & in the holidays & enjoyed saving my earnings & deciding what to do with it. Somehow, when I left home for university, I left my financial sense at home! I was solvent for two terms only, then overspent my income just about every month from then until into my early 40s. I'm not sure what changed, except that I was suddenly in a big city & surrounded by STUFF!! While my parents were sensible with money, they never talked to us about budgeting.....Mum would just say 'Money doesn't grow on trees' if we asked for something too expensive, & as we knew that - we took it literally - we didn't get to the nitty gritty of 'If we've got this amount of money, we have to think of all the stuff we really NEED to buy, before we can have treats, etc'. Having sensible parents in itself is not enough to stop the offspring choosing to live outside their means. So showing the principles of budgeting is vital. Also, I think children need to be taught about advertising......i.e Of course the advert is making that sound like a fab toy, because the company want to sell lots & lots of them.....they are never going to say 'Buy this cos it's made in a sweatshop in China & the head'll probably fall off'. Same as adults look at ads for things like anti-wrinkle cream, looks & sounds good but the manufacturer is hardly likely to say 'You could spend loads on this when cheaper product will be absolutely as good'. It's part of learning how to make wise choices. Perhaps children need to learn that once their money has been spent, it is gone. It can't be spent again, so it's a good idea to have a really good think, & sometimes a little bit of a wait, to make sure it's what they want.
And lastly, as they get older......if they get into financial trouble through silly spending behaviour, bail them out once, but don't do it again. If I hadn't been bailed out by my parents on several occasions in my late teens & twenties, I think I would have had to get to grips with learning to budget much earlier than I did.

415SanFran

It's really strange but when I was growing up we lived on a farm so I rarley saw money. I am good with money, however my sister is a disaster. Never has any money but always has the newest phone type of person. That said I can't count how many times she has asked me to go to the door because it is a debt collector.
I have two children one is very careful and has furnished his motgaged flat out of boot sales and second hand shops,. (You never could tell it's lovely) My daughter on the other hand has got everything you can think of from either catologs or brighthouse, and never has any money to call her own.
I'm not sure that upbringing has much to do with it, my daughter thinks I am mean and laughs at my ebaying, (but admits it keeps me quiet) my son will happily help me and thinks it is a great idea. My son see's that I HAVE to do it to stay out of debt. where my daughter would just ask for a loan with no thought of how it was ever going to get paid back.

saterkey

we have always talked about finances with them at dinner and other times if something has come up, holidays etc.

I have always put away 10ukp a month for them each into savings accounts, my daughter is 16 and we went to the bank together opened up a current account with the bank manager with me there asking questions that she might need to know, we practiced getting money out at the counter, at the cashpoint together etc, she gets money off us which goes straight into an iSA account, then a bursary for doing sixth form, this is her spending money, she checks her statement monthly, opens her mail, all normal adult stuff, I just showed her there was nothing to be scared of, now she does it all on her own, saves and budgets her social life, make up, buses etc. I pay for basics, clothes and shoes etc otherwise.

Im going on the understanding that shell be at uni in a year or so and needs to be able to look after herself.

Im doing the same with drinking, shes started going to a lot of parties, so shes testing which drinks and how much and learning about peer pressure at these house parties, quite scary as a parent but at the end of the day hopefully she wont go too overboard at university. im there to take, pick up, advise, offer tea toast and say I told you so next day, chuckle. Shes learning about safe lifts, to eat before, to drink water, to look after her friends, to know which friends she can rely on etc. all good stuff really.

I think as a parent you just have to walk it through with them, teach but try not to preach, make sure they know the options, who to go to for help and pray they don't get into debt, if they do at least you know you did your best to guide.

Forgot to say shes done lots of volunteering, library, and particularly at the charity shop for the last two years, shes serves on the till, handles money, and prices up donations which is all good practice too.

clouds21

When I was about 14 my parents sat me and my sister down and explained that, instead of pocket money, we would get a quarterly allowance henceforth to pay for clothing, school books, sport memberships, sweets, magazines and other personal items. If we ran out, we ran out and would not receive any money from Mum and Dad until the following quarter. I also had tutoring and babysitting jobs, which helped towards the end of a quarter but more often than not I put the money in the bank and saved up for something big.

We both had savings accounts from an early age and all our birthday and Christmas monies as well as my Opa's lottery winnings which he shared with my sister and me went into our savings. We used that money for things like learning to play tennis, skiing and horse riding; if you've paid for lessons yourself, you're less likely to give up on a hobby too quickly!

Our parents also taught us to think twice before shelling out money (nine times out of ten I wouldn't buy something I had desperately wanted initially!). When I wanted to learn to drive, my parents offered to pay for the majority of the lessons, provided I got comparative quotes from the driving schools in our area (I've still got the table I drew with the different categories somewhere!) and paid for a third of the total cost.

I've inherited a natural aversion against debt (whether of a monetary or moral nature) which includes borrowing money from other people (and lending it casually to others as it causes bad blood) but I agree with a comment made further up that some debt, e.g. mortgage, can be useful as long as it does not become a burden. I have a credit card (that pays cashback) which I use to pay everything and pay off in full every month.

Learning about money, how to use and respect it, is a very valuable lesson in life, it can make or break a relationship, so it's good to start early, 4 is not too young to start with things like coins and change, even if it's a case of " I have £1, want 2 Highland Toffees, I know I can get 5 for £1, so I should get 6 round coins with a 10 on them or 3 heptagonally shaped coins with a 20 on them in change"!

quantic

I don't believe its a case particularly of making sure kids don't get into debt as such, its more making sure they understand their finances, some debt can be quite useful when balanced correctly. I think if you take the approach that "ALL DEBT IS BAD, BEWARE" they will grow up with no understanding and when they do get into debt, they wont know which are ok and which are not.

I think its a better idea to educate people on money in general so they have a healthy understanding, its like food, got to have a balance. Nothing wrong with using a 0% credit card to spread car insurance over 12 months, rather than paying the insurance provider 18.9% for the privilege.

There just needs to be a lot more honesty, my parents have always been quite upfront with the cost of things and what to avoid. I don't do everything the same as my parents but I used what they taught me as a foundation.

I don't know why, but when I was younger I always thought it was weird that my dad only ever used his debit card, it sounds ridiculous but I thought he must have been less wealthy than other people because when I was out with friends their parents always seemed to use a credit card, until I asked him about it when I was about 12 and he explained that he didn't need to use a credit card for anything because he always kept enough money in his account for the month etc.

Think that ingrained in me that using your own cash for most things is best.

FBaby

I think its a better idea to educate people on money in general so they have a healthy understanding, its like food, got to have a balance. Nothing wrong with using a 0% credit card to spread car insurance over 12 months, rather than paying the insurance provider 18.9% for the privilege.

I think it's all about the definition of 'debt'. I just wouldn't call the above a 'debt', but a financial management tool (if monthly payment are also set up in advance and never touched).

onamissionEU

This is an issue close to my heart. I had serious debt issues throughout my 20's and want to make sure that my child/children have a proper understanding of money and budgeting. As a child/teenager I used to hoard money and loved watching savings grow. As soon as I started earning a wage I started to build up credit card debts. I am not sure how it all started and why I changed from a thrifty child to an irresponsible young adult. But anyway....

My daugher is 1 year old & we hope for another baby soon. We believe learning & teaching start from day 1. The early approach we are taking is to limit the amount of toys DD has so that she learns to use what is available. Bitrhdays, christmas and other occasions will not be the dazzling collections of presents etc that most children "expect". We have asked friends and family NOT to buy any gifts for ANY occasions for our daughter - rather if they want to contribute, a cash gift (direct on to DD's bank account) would be preferred and my wife and I would purchase 2 or 3 "nice" presents for our daughter "from the whole family". We hope she will then appreciate the presents she does receive and she will one day be given access to her bank account (once she has proved responsible) on which there is already nearly 1 thousand pounds.

As she gets older whe will be involved in shopping and household finances (to a degree) so she learns what money is. Simple things like getting her to pay for shopping and calculating what change is due will also become part of the norm. We as a household have no debts & will teach that apart from mortgages, debts are to be avoided (and why). I do think though, that kids often need to learn the hard way and as parents we need to observe from a distance but be ready to step in and offer guidance.

Prothet_of_Doom

The words "Mummy only has enough money for the things we need, and we don't need sweets" is a good place to start.

As is giving a small amount of pocket money, with the opportunity to obtain a little more for extra chores around the house.

I take the point that using a card means a child can not see the money.

Simple choices when on a day trip. " Right kids, daddy has £2 left, and we all want an ice cream, and the ice cream van wants £2 each..Anyone got any money? Any ideas ?" .....ended up in Iceland Buying a box of choc ices for £1, and a bottle of lemonade for 69p.
They still remind me if we go on a day out and I try to buy an ice cream "Er Dad, I think we passed an aldi on the way"

As they get older, discussing options and decisions openly. When I was made redundant, my 16 year old lad (now 20) took me aside, to tell me "Look I've got £3000 saved up, so if you need it, you can have it" I cried.

gfplux

Like the original poster when I was growing up my parents had very little money.
Unlike the original poster this made me very careful with money and I have always been driven by the fear of being poor.
My definition of being poor is constantly spending more than than I earned and not saving.