Parents have the full responsibility for their children and their education. It is up to parents to teach their children what's right and what's wrong, how to conduct themselves as good citizens, how to cross the road safely and generally protect themselves from harm. In fact, up until the time that child is an adult, the parents have responsibilities in every part of that child's life, right up until the time they are a college student.
The influence of the parents, however, goes way beyond college student days. Whether they like it or not, or even admit it, everyone is influenced not only by the way their parents have treated them, but also by the behavioural patterns of the parents. That influence can be good, bad or neutral, but it is there, and it affects many aspects of daily lives. One of the main features of daily life is finance: money, debt, borrowing, lending, spending, and credit cards all fall within that sphere.
It follows that parents can have an influence on their children's attitude to credit cards and credit card debt. As a good teacher, mentor and financial adviser, the parent can help to create a positive financial attitude in their children that will help them through their college student days, and eliminate or prevent credit card debt from their future lives.
What Can A Parent Do To Help Their Student Children Prevent Debt?
Parents are not the only influence on their children. They and their children face a barrage of marketing for credit cards that has reached brainwashing proportions. Easy credit pervades society like a highly contagious virus; it is difficult enough for the parents not to succumb to the debt that follows easy credit, let alone their student children. And if the parents succumb, what chance do the children have?
Well, all is not entirely lost. All parents know, or should know, that trying to force feed attitudes and habits on their maturing children is likely to backfire. Many children are rebellious, and will often be inclined to go against the parents wishes or advice. That would apply as much to teaching how to manage their finances as anything else.
However, if you accept that you cannot just force something on your children, you can bring them up in an environment that may, through their own observation, make the children think twice about running up credit card debts as a student, and later still in their lives. Here are just a few ideas:
1. Get the children into the saving habit from a young age, but do it in a way that let's them see the benefits. Start a savings account for them even as a one year old, and as they get a bit older, just explain to them what it is and why. No harsh lectures, just a simple explanation that you are helping them to save money for something they will appreciate later. But not too much into the future; saying they will not be able to touch it until they are 25 will not help.
The savings theme can be on two levels. Part of the savings could be long term, but part also for something the child will be able to buy within a year. That way, the child has the anticipation of a benefit within a reasonable time; the balance of the savings can go on to accumulate. Ensure you have a savings account that will pay interest on all money in the account, so that when the first and subsequent interest payments are posted to the account, you can show the child that they have this “bonus" in their account. Explain it is the bank paying them money for leaving their savings in the account.
It is important for the child to feel that it is their money that is being saved, so explain it is part of their pocket money being put away. Also encourage them, but not force them, to sometimes put birthday or other gift money in the account too. Over the years, this will, hopefully, become a habit that is a useful contra to the debt culture. They will get used to the bank paying them, so when it comes to considering credit cards later, they may be more likely to question the large interest charges the bank makes for using the credit cards.
2. Encourage children to earn a bit of extra pocket money by doing little jobs around the house or in the garden. Say this will help them save for whatever it is they want to save for. Car washing, mowing the lawn when old enough, vacuuming; whatever needs to be done, ask if they would like to do the jobs for the extra money. Then, when paid, encourage them, but do not force them, to save at least part of the earnings. Again, this could become a habit that will stand them in good stead later on, and they will tend to consider the working route to extra money rather than expensive borrowing.
3. When they start doing more advanced maths, say at 9 or 10 years old, help them do a little budget plan for their savings. That will be a simple but quite mature approach for them.
4. The most difficult of all is to set a good example, but do not make a big fuss about it. Mention casually once in a while, for example when there's a commercial on television for a credit card, that the charges are so high, but it is probably best not to give serious lectures and warnings about credit cards and debt. Try not to use credit cards yourself, especially lavishly and in front of the children.
There is not guarantee that any of the above will make one iota of difference, but at least, as with many aspects of parenting, you have given it your best shot.
This student debt article was written by Roy Thomsitt, owner and part author of the Eliminate Credit Card Debt Now website.