Debt: For many young people, it is an everyday reality. Young people are often sensitive to peer pressure, fads, and advertising. And this is a financially dangerous combination. How can you increase your children’s economic independence? How can you help them have and maintain control of their personal finances? And what should you do if things go wrong? Here are some tips to help parents and children stay out of debt!
On = On
Teach your child that “on” is really “on”. When the money runs out, they have to save up to buy another one. Borrowing money from friends and family is possible, but it has the disadvantage of paying it back by the due date. Sometimes interest and additional charges may apply. Besides, delays or nonpayment can lead to fights, for example, or ruin friendships or damage your reputation among friends. Getting back into debt to pay back debt will only make matters worse. Before you know it, you’ll be plugging one hole after another, and you won’t be able to get out of worrying about money. So it is wiser to save and be patient.
Still in Debt?
Once the debt is incurred, you, the parent, can pay it. However, this often only solves the problem in the short term. If your child continues to spend more money than you have, the problem will recur. So, help your child only under certain conditions. Create a monthly income and expense summary. Identify what the child has left and what is missing, and together draw up a contract that should prevent debt. However, this behavior change requires a lot of discipline and accountability.
Too big of a problem to solve on your own, because your child keeps getting into trouble? Then, try to get assistance from a budget specialist. These agencies help people get out of debt. Remember, however, that this is not without commitment, but it does take away a lot of responsibility and offers financial freedom.
Some More Tips
- Give children a set amount of allowance. Keep them strictly within that budget (never let them borrow).
- Reward special work. This way, they can learn that hard work pays off.
- Warn them about the world of false advertising.
- Try to save a set amount each week. Discover, for example, the benefits of postponing consumption and the amount you save.
- Encourage your children to earn extra income or have a business. This makes them more thoughtful and more independent.
- Discuss tips with your children and help them stay out of debt.
- Don’t spend more money than you have coming in. This will always be a problem.
- Buy consciously. Is that one expensive purchase essential? Or will you have much less fun the next week? Children are surprisingly honest in their answers.
- Make the child aware of the temptation of advertising. Explain the risks and ask why buying a particular product will suddenly improve their lives.
- Does your child still want to borrow money? Borrow this amount as a parent and clarify the budget and repayment agreement.
- Make it clear that small, innocent debts grow and grow and grow and are no longer under control.
- Know the value of money. Let the child take an active role in managing and controlling it.
- Talk to your child about your experiences, decisions, mistakes, and solutions.
- Make the child resilient to peer pressure. Young people are sensitive to peer pressure regarding certain brands of clothing, games, cell phones, etc.
Let us know if these few tips have helped you in the comments below!