As parents we need to do a better job talking to our children about their personal finances. We send them to school to learn valuable lessons in civics, mathematics, history etc. But, it is our jobs as parents to help them understand the complex concepts of personal finance as we’re preparing them to leave the nest. A big part of this education is a basic understanding of how consumer debt can impact their futures for years to come. This is essential knowledge for our children in order for them to have a successful financial future. It’s an education sorely lacking in most young people.
Living in a college town, where the population swells each fall with new doe eyed young adults on their own for the first time, the vast innocence of youth is on stark display. As credit card offers litter the mail of the college dorms, and local restaurants and shops swell with young people throwing around their new plastic, I think about years of minimum payments and the future income given up to pay off misused credit. A lot of these freshly minted adults have never had a discussion with teachers or parents on personal finance. Virtually none have an understand the perils of consumer debt. So, whose duty is it to ensure that this education has been provided? Their schools duty? NO, it’s your duty as a parents to ensure that your child is prepared to leave the nest, this includes a solid understanding of personal finance and money management tools.
It’s not unexpected that there’s a lack of personal finance education. Or, that credit card debt is a major problem amongst young people. Most of their parents lack a solid understanding of these concepts, and also have problems with credit card debt. Living in a world with easy access to credit is both a blessing and a curse. The instant gratification that credit cards can offer is incredibly alluring, even for seasoned credit veterans. However, it can be downright irresistible for young college students trying to understand their personal finances for the first time. If you need a refresher on how much consumer debt can cost you in the long run, especially when you start accumulating debt early in life, I’ve written a number of posts on this topic. The Monthly Payment Trap, or Compound Interest, are worth a read for your 18 year old getting ready to leave the nest.