Money Talk: The national debt and your kids

What does the national debt mean for our kids? Here’s a startling statistic: The lifetime share of our national debt for a two-year-old is estimated at $1,487,787. That means that this generation will have to be millionaires-and-a-half just to keep up with Uncle Sam!

The national debt is not going away quietly, so what can parents do to help put this in perspective for our kids. You can start a dialog in your home to help your kids understand that government and personal choices about money have long-lasting effects. As you talk with your kids you also help them see the responsibility each of us has as citizens.

Here are some thoughts to get you started talking about debt with your kids.

What is debt?

  • Kids can see tangible possessions but don’t know that money may have been borrowed to buy the item. Likewise, kids don’t know that debt is like a bill that needs to be paid. Buying a house is a great example of how a decision to get something results in a promise to pay the borrowed money back over time.

What does debt do?

  • Obviously, making personal loan payments uses part of one’s monthly income and reduces the amount of money available for other spending. Car payments are a good example of how a regular payment is treated like a bill having to be paid every month.

What about the national debt?

  • This is a frequent news topic. Explain that the government also “borrows” money to pay its expenses creating the debt. However, be sure your kids understand that the money the government is spending comes from the taxes you pay, local, state, and federal.

What can people do about the national debt?

  • Vote. Find out how candidates stand on financial issues and vote. The people who get elected will be spending your tax dollars.
  • Contact elected officials. Local, state, and federal government officials need to know what you think about budget issues. Show up at local government and school board budget hearings to show your interest.

What can your family do about personal debt?
Involve your kids in your spending decisions and explain your rationale for making some of the choices you do. Perhaps this year your family votes to take a less expensive vacation, or to forego buying a new car. Be prepared as a family (and as citizens) to accept the consequences of some tough choices.

Prepare your kids to be responsible managers of their own money.
Children who learn to manage money early will be better prepared to survive in an uncertain financial future. Parents who help their children learn money management through hands-on practice at home provide kids an essential life skill.

The No-Cash Allowance is a reliable, repeatable and realistic method to learn money management skills at home. Children from pre-school through high school can practice concepts of debit card, ATMs, electronic transfers and credit transactions using their own money. Examples of dialogue between parent and child create a picture of real life situations. Charts, tables and illustrations show how to set-up and let children track all their money in their own accounts. Kids see the “big picture” view of their money and learn that each decision affects the balance, a reality that will be constant throughout their lives.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school. 

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