Why You Should Teach Your Teenagers Not to Borrow Money

Borrowing money has caused millions of Americans nothing more than headaches and heartaches as they watch their possessions, homes and cars, become repossessed. It’s caused bankruptcies and more stress than anyone should have to endure. It’s not something you’d wish on your family members and certainly not your children. Yet, many teenagers are poised to repeat the mistakes their parents have made. Let’s take a look at why you should teach your teenagers not to borrow money.

#1 Teenagers are impressionable. That means they’re at a pivotal moment where they can learn good or bad habits. If you not only model good habits but also talk about money, you’ll help them for the rest of their lives. You can show them the difference between saving for items you want compared with buying them for instant gratification and life-long debt. You can show them how the little things matter and material things - while fun - aren’t worth debt.

#2 Teenagers will be inundated with credit cards once they leave home. Too many teenagers aren’t wise to the pitfalls of debt and ruin their credit scores before they’ve ever had their first real job. It’s too much stress for a young person just starting out on their own to manage. Teaching them to save today will help them for the rest of their life.

#3 Give them a chance to practice. Whether your teenager has a job or not, it’s important that they learn to save at an early age. This will help them learn good habits now and prevent the desire or need to borrow when they’re away from home.

#4 Don’t give them a credit card to help them establish credit. Give them a debit card. Debit cards deduct money right from their savings or checking account. This teaches children to budget their money and helps them establish credit.

#5 Don’t co-sign a car loan with them. Do encourage them to save money to buy a car and teach them the benefits and rewards of saving.

#6 Don’t plan on getting a loan for college. Teach them at an early age that their grades and performance matters. They can apply for financial aid, for grants and scholarships. If they know at a young age that college loans are the answer, they may not work as hard to earn money to pay for college.

#7 Be honest about your financial situation. If you’ve made financial mistakes, for example you have credit card debt, talk with your children about those mistakes and the lessons you’ve learned. Of course, you also have to follow through on your talks. Children notice what we say and what we do, and it’s important to practice what you preach.

Debt can cause a lifetime of trouble and teaching your teenager during these important and formative years, when they’re still impressionable but also have the capacity to understand money, is incredibly important. Talk about money, teach them to save, give them opportunities to manage their own money and be a good role model when it comes to debt. Your children will thank you for it.

Learn more about how you can teach your kids about money...