Too many people today are facing financial hardships because of their debt. Recent studies show that more than a third of Americans feel their financial situations have worsened over the past year.
If you’re among the multitude of people struggling to make ends meet due to debt, the debt relief attorneys at National Legal Center are here to help. We don’t just want to help you, though. We want to help your children, too! Here are four money lessons to help your children avoid debt.
1. Teach your children to envision financial success.
Every parent wants their child to be successful. Success, of course, can be defined in a multitude of ways. For now, though, let’s focus on financial success.
Many people were raised to equate wealth with greed or that well-off people must have done something morally questionable along their path. Money doesn’t have to be vilified, though. There’s nothing wrong with encouraging your children to envision themselves as being financially successful in the future.
Ask your child to envision their future financial success. Ask them what it looks like. Allow them to imagine and let them bring you into that world with them. Having conversations like this will help them define financial success and adopt a mindset that creates a healthy relationship with money.
2. Teach your children the difference between debit and credit.
Recent surveys show that 79% of the national population embraces credit cards. However, while credit cards are very convenient, you can easily overlook that credit is just debt in disguise and can be harmful when not handled responsibly.
When discussing money with your children, you should explain the difference between debit cards and credit cards. Begin by explaining how using a credit card allows someone to buy something now and pay for it later, whereas a debit card directly pays for the transaction with funds in the bank.
You might also consider explaining the security benefits that come with credit cards over debit cards. Specifically, they limit the direct line of access to your bank account. Of course, as with many financial decisions, your child will want to understand how to weigh the pros and cons as they decide whether to use debit or credit.
3. Instill financial values intended to help your children avoid debt.
There’s a lot of buzz about bringing financial education into public schooling curriculums. National Legal Center Principal Attorney, Arthur Kohler, emphatically embraces the initiative and believes it can benefit our next generation tremendously.
In addition to bringing financial education into schools, we need to instill financial values, which starts at home.
There are a few financial values that can help your children avoid debt.
First, your child should know the importance of saving. If you teach them about money from an early age, it shouldn’t be challenging to guide them to understand that saving is essential to avoiding debt and securing their financial future.
Second, make sure your children understand the importance of living within their means. They need to know that debt is not a way of life, and they must always make an effort to spend and save responsibly.
Next, instill in your child that credit can be helpful, but it can also be dangerous. Make sure they know that credit is a tool they should use responsibly. Credit cards are heavily marketed and can seem exciting, but your child should understand how credit leads to debt if not used correctly.
Finally, we come to gratitude. It is so easy to fall into the trap of comparing ourselves to others and aligning our worth or success to others’ material belongings. Helping your child find gratitude for the things they have—especially the non-tangibles—will make it easier for them to ignore that yearning that we all experience.
4. Encourage your child to be open about finances (by being open yourself).
Studies show that children learn lessons more quickly than adults. We know this to be especially true when it comes to learning languages—the more they hear it, the easier it is for them to learn.
So, let’s apply this same concept to money matters.
The younger your child is when they begin to learn about money—and the more they encounter discussions about it in their home—the easier it will be for them to understand the concepts. Parents can encourage their children to be open about finances by being open about their own finances.
You can further your child’s understanding of finances by talking with them about how you manage your money. Specifically, share the struggles you have faced, those you’ve overcome, and those you’re still working through.
Most of us face financial insecurity at some point in our lives.
Teach your child that this is normal and that even the direst of debt can be resolved by being willing to speak with others and get help when needed. You have the opportunity to show them how to put this into practice by ‘walking the walk.’ This is the rare situation where that actually happens by ‘talking-the-talk’!
Be honest and open with your children about the power of getting the right advice and how it can change lives for the better.
Perspective: Ellen Rogin
Financial education is a passionate topic for many of us here at National Legal. Admittedly, though, it’s not our pure focus. We are a law firm. We help people #standuptodebt, assert their rights as a debtor, and use legal strategies to solve their debt difficulties.
Ellen Rogin, though, is an expert in financial education.
Here is her TedTalk, where she offers actionable suggestions to help your kids avoid debt.
By instilling these financial values early on, your children will have a much easier time avoiding debt as they get older. They will know not to fall for the credit card hype, and they’ll come to understand that overspending (and the debt that comes with it) doesn’t need to be a way of life. Instead, encourage them! Be open with them and lead by example, even when it’s tough.
If you’re overwhelmed by debt and need a helping hand, let us lead the way. The compassionate legal team at National Legal Center is ready to guide you to a debt-free future, one step at a time.