Teaching Kids About Debt and Everyday Money Matters

Children and money: these are the two words that do not really bode well with each other, especially if you are the parent or guardian in charge of both.

Often, we give little thought to children's financial education; we just assume that they will learn how be responsible for their own money when they grow older.

(We are actually hoping that they pick some useful stuff about money in school.

) However, their money habits, for good or bad, are developed very early on; much, much earlier than their school years. Usually kids tend to emulate what they see and hear from the home.

Children, therefore, tend to look at money the same way you do. If you show your little munchkins that you can handle your personal finance easily, and do not really look at money as something to be worried about, your children will also look at money the same way. Unfortunately, this is almost always the case - and not in a good way too. Very often, when we are faced with money problems (like paying off debts or balancing bank overdraft, etc.
) we do not show the tykes our struggle with our finances.

We assume that they are simply too young to understand the value of money.

But unless someone teaches them that, and how hard it is to earn money, and how difficult it is to balance daily expenses, they will never really know. The kids, in turn will grow up assuming that since cash is never really an issue at home, money will always flow freely from parents - simply because parents are supposed to have money, and that parents are supposed to give kids money, and that no one is supposed to be worried about its comings and goings.

Although we are not recommending that you sit down with your kids and lay out all your money troubles at one go, (complete with drama,) you could try more subtle approaches. First of all, you could try explaining to them what debt is, and why you have one for the moment, if you have one. Tell them in such a way that they will grasp the meaning of debt - that it is something that happens, and that (hopefully) you have every intention of paying it off.

Your next step is to then explain to them the concept of saving money to pay off the debt.
You could cite more concrete examples, like telling them the actual reasons as to why you cannot buy them that video game console for their birthday this year, or that the Christmas list will have to be shortened somewhat.
In any case, these are the very first steps to their financial education.

By showing them that money does matter in everyday living, and that you are adult enough to inform them in such matters, you kids just might develop a deeper appreciation as to your late nights from work, and your tiredness during the work week.
(Don't you wish your parents made the same effort for you when you were a kid?) Plus, they get to think of money as something that must eventually be earned, and saved.