What to Talk About with Your Kids about Debt

Posted by: Meredith K. | Jan 11,2008


Yesterday, I wrote a post about how parents take some of the responsibility if their kids go deep into debt.  Not all of the responsibility, mind you, but parents have to be involved with their kids’ wallets to make sure that they’re prepared when they leave home.  Today, I’d like to offer a checklist to help make sure this is the case. 

1. Describe the basics about credit.  Young people may have no idea about how credit cards work – i.e. just how much of the monthly bill goes to things besides the bill itself.  Saying that an item bought on credit could cost twice as much when all is said and done is a powerful message.  
2. Let them know they can talk about it.  Going deep into debt can be a shame-ridden experience.  No young person wants to admit they’re deep in debt because of some ill-advised purchases.  But they have to know they’ll have a willing ear.  They have to also know that a parent won’t just solve everything by immediately signing a check.  That solves nothing.  
3. Tell them to order up a free copy of their credit report.  The more info a young person has about his or her credit history, the less likely he or she will be to abuse the privilege of credit.  Make sure they also watch out for identity theft.    
4. Don’t spend more on credit than you can afford to pay back.  Sounds basic, but some young people spend more on credit than they can even afford to pay off with minimum payments.  If he can’t afford it, he’s going to have to get a job, if he doesn’t have one already.
5. Send them to this website!  HA, I’ve got a lot to say about the topic.  

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