How to Set a Good Example When You’re In DebtMar 28, 2018
High interest rates, sky rocketing childcare costs, aging parents who require care, and challenging wages, make staying out of debt difficult for many Gen-X parents. This month’s podcast talks about those challenges, some of the steps you can take, and how to make the most of the teachable moments with your kids. Here are some of the ways our Licensed Insolvency Trustees (LITs) say you can set a good example to help your kids avoid debt in their future:
1. Be calm
Finances can often be a bit of a mystery for kids, and debt is even more of a mystery. What your kid might recognise is that you’re under stress, or that you’re worried about something.
Do your best to be calm and talk about money reasonably. Costs in Ontario, and Canada more widely, are high for families. But remember–you have options. Even if your debt is overwhelming, you can talk with a professional like a LIT who can explain what debt relief solutions are available to you. Declaring bankruptcy is not your only option. It’s often a last resort solution.
The more you understand your options, and that you have them–the calmer you will feel and act. Getting out of debt, and finding the right solution for your situation, is a good lesson for kids. Avoiding debt only makes it worse.
2. Introduce them to money management
Knowing that it takes time and attention to manage money and avoid debt is a good lesson. Show your child how you do that. Introduce them to the budgeting method you use. Tell them how you make decisions to prioritize certain purchases or savings over other spending opportunities.
If you’re looking for a good way to organise your budget, check out Mint . It’s a great way to stay on budget on-the-go. The graphs and tools can also help you show your child how you manage your money.
Talk with Our Kids About Money has many age-appropriate lessons and games to get your kid interested in managing money and saving to avoid debt.
In times of financial stress, your kids will feel more secure if they see you acting to solve the problem. Find your comfort zone with sharing information with them, and keep them engaged by asking them to help you make decisions about what purchases to prioritize or what things to save for.
Debt doesn’t have to control your life. Work with a professional to reduce your debt and show your child how you manage money and achieve your financial goals.