10 Ways to Secure Your Kids Against Debt

Everybody wants their children to do well.  I want my kids to grow up without making my mistakes.  Here are a few ways to help them avoid debt.

  1. Talk to your kids about money.  Your kids will never learn how to handle their finances if nobody teaches them how.   This is important.    The factor that contributes most to stress, divorce, long hours, and unhappiness can’t be left to chance.
  2. Set a good example. Spend less than you have and let them see you doing it.  No matter what you tell your kids, if they see you doing otherwise, they will learn the bad lesson.   Money, work, relationships.  They all need attention, and your kids are watching you manage each of them.  Make them proud.
  3. Open a savings account for them, and let them fill it. Teach them the value of their money by letting them work for it, watch it accumulate, and spend it on something they care about.  I make my kids work to convince me to make a withdrawal, so they know it is only for the important things.  I don’t, however, decide what is important for them.
  4. Start a college fund. $100 or $10, it doesn’t matter.  Start putting something aside today.   College costs keep rising.  In 10 years, or 20, you can be sure that college will cost more than it does today.  Last year, nearly two-thirds of students graduating with a four-year degree did so with an average debt of more than $23,000.   Anything you can do to move your kids towards the debt-free 35% will help.  They will thank you for it for the rest of their lives.  Remember, they are in charge of choosing your nursing home.
  5. Teach delayed gratification. Don’t let them think that every whim needs to be satisfied…ever, let alone immediately.  Sometimes, anticipation improves the act.   When I am looking forward to a good meal for a few days or weeks, I really savor it when I finally do get the chance to eat it.  If they want everything they see, make them figure out what they want most, and what it will take to get it.
  6. Teach them to balance a checkbook. This is one of life’s basic skills that far too many people are lacking.   If you can’t balance your checkbook, how do you know what you have?  If you don’t know what you have, how can you know what you’re able to spend on necessities, or even luxuries?  Knowing where you are is at least as important as knowing where you are going.
  7. Give them control of money. This is the best time to learn how to manage money.  Give them an allowance and make it big enough to cover school lunch and bus fare.   Let them practice real-world skills and, more importantly…
  8. Let them make mistakes with it. This is their opportunity to make financial mistakes that won’t haunt them for years or decades.   Let them have some money and let them screw it up.  When they can’t buy the new game, or can’t fix their car, they will learn.  It’s better to do that as teenagers living at home than as adults forced to move back home.
  9. Let them see your pride in their good decisions. If they do well, tell them.  Let their endorphin rush come from your praise instead of their purchase.  You aren’t helping them by getting them hooked on the latest gadget.  You are helping them by making them feel good about making the right decisions.
  10. Beat them with a stick.

How do you protect your kids’ future finances from the kids themselves?

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    1. I think number 10 is very important. I would always be the one that would have to find the stick when I was a kid, and was warned if it was too small that I wouldn’t want to see the stick my dad would pick 🙂

    2. some excellent points, never too late to start some kind of savings for them, even as soon as they’re born. Although that can be a little hard especially if you have low income and having a kid is expensive..

    3. I don’t have kids yet. But if/when I do, I will totally remember rule 10. 😉 I personally really love your idea of teaching them to prioritize too.

    4. I’ve been thinking long and hard about the college savings, and I think starting small right now is a good idea for us. It’ll get us into the habit to put $20 away per month — later, we can build on that habit…and then beat them with a stick.

    5. Great tips. My parents started me early, thankfully. Took me to open an account and got the savings book. I thought it was the coolest thing to take money in, get it stamped and add it up.

    6. Good tips here. I especially like the first two as most critical. It’s important to talk to them, AND to model good financial behavior. The old saying “do as I say, not as I do” seems to be ineffective in terms of teaching kids good money habits!

    7. #10 put a smile on my face! I have been reading financial blogs and this is the only post that explicit states physical punishment on kids.

      I deeply believe on this verse:
      Proverbs 13:24(KJV): “He that spareth his rod hateth his son: but he that loveth him chasteneth him betimes.”

      Children who are not properly disciplined, are among the most miserable of children. An informal survey in our city jail stated that most of the inmates were reared by grandparents(and we know grandparents never beat kids with sticks!).

      Best regards,

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