Teach Teens to Live Debt-Free
After years of helping people get out of debt, I believe it’s never too early to teach children how to live debt-free. Once they reach the teen years, avoiding debt is an absolutely essential life skill.
Teens are bombarded with the idea of “Buy now, pay later” or “Get a loan to help your credit score.” After all, other teens are getting loans; why shouldn’t they borrow money from the bank, too?
I had a recent conversation that went like this:
“Soon you’ll be driving a big black truck,” I said to my fourteen-year-old friend.
“Not a truck. I’ll be driving a Jeep,” he replied, grinning from ear to ear.
“Yes, I’m going to buy a Jeep.”
“But first you’ll learn to drive in your daddy’s truck, right?”
“No. My mom’s going to help me get a loan so I can learn to drive in the Jeep,” he assured me.
“Oh, no! Please don’t go into debt!” I almost said aloud. His parents were hopelessly in debt, meeting with us often for help with debt and marriage problems. Now they were sending their son down the same road.
The teenage years are a time of idealism and hope. Most teens believe that they will grow up to have lots of money to be able to enjoy all the things they want in life. They don’t realize how expensive life is. They expect their money situation to get better and better as they age.
The opposite is true. Teens who work have more disposable income than young married couples with children. Teenagers have free rent, food, clothing, gas, books, supplies, television, computers, iPods, electrical appliances, trips, toiletries, vacations, movies, and use of the family car whenever they want to drive. So, they are free to spend money they earn however they want to spend it.
Unless you do things differently.
Teens & Car Payments
“Do teenagers really take out loans to buy a car?” I asked my husband later that night as we talked together.
“Honey, many teens get a job at a fast-food restaurant or grocery store, and their bosses encourage them to take out a loan, figuring that a teenager with a loan will be a better employee.”
“Oh, dear,” I mumbled, shocked.
Why would a parent encourage a child to go into debt? How is that loving?
Teach Your Teens to Save & Spend
One thing I do when I teach the economic cycle in high school economics is to explain how families often go through the same cycle over the years. There are times of abundance and times where things are tough. If we save during the abundant years, we’ll make it through the tight ones.
Open a savings account with your teen at your bank or financial institution. Savings accounts for minors or college students are usually free. Encourage them to tithe 10% and save 10% or more from any money they earn or receive as gifts.
My grandmother collected “rent money” from children and grandchildren when they lived with her. She tucked it away and returned it to them when they needed money for college tuition or a down-payment on a house.
Have teens pay for some or all of the things they use, even if it is something simple like shampoo and soap. This will teach them a little about the value of money and the cost of living.
I include this kind of teaching in their high school economics course. We learn to budget, buy a car, save for long-term expenses, and barter. One of the things we do is the “Apartment Project” where they have to chose a nearby apartment to “rent,” “furnish,” and “pay bills” in. After totaling up all their expenses, they figure out how much money they need to make to afford it. It’s a great life lesson.
For more information, read Our Most Popular Economics Assignment: The Apartment Project HERE.
Teach Your Teens about Debt
Talk about debt with your teenagers and teach them how to get out of debt—they just might be able to help other people. Explain to them the warnings about debt in Scripture, how all debt must be paid back and that God sees debt as foolishness.
“The rich rule over the poor, and the borrower is servant to the lender” (Proverbs 22:7 NIV).
“The wicked borrow and do not repay, but the righteous give generously” (Psalm 37:21 NIV).
Your teen can live a life free from debt. He will assume living debt-free is good if he sees his parents’ positive example of debt-free living. God’s way is to wait on the Lord for provision rather than using debt to buy things that you cannot afford. You will give your teen a great gift if they can imitate the godly way you handle your money.
Tell teens real life stories about how debt has ruined people’s lives. Give them examples and explain the bad fruit that accompanies debt. Show them facts and figures. Show how much you pay when you pay with cash. Then show them the total amount paid for an item when you borrow money. Total up all the payments, including interest and fees. Your teen will be shocked at how much more you pay when you borrow money.
Hard Work & Delayed Gratification
Instead of borrowing money to get what they want, teens can learn God’s method of acquiring wealth: delayed gratification and hard work.
The secret to financial success is delayed gratification, waiting to purchase things and spend money until God has provided the money to do so. This requires self-control. Growing that self-control muscle can lead to saving money to invest and make more money, too.
Hard work is good for character-building. When teens work hard, save their money, and purchase what they need or want, it makes them feel successful and confident. It always feels so good to do things God’s way.
Wouldn’t it be wonderful to set your teens up for financial success? You can do it!
Until next time, Happy Homeschooling!
Meredith Curtis, homeschooling mom, writer, speaker, and publisher, loves to encourage families in their homeschooling adventure. She is the author of Celebrate Thanksgiving, Travel God’s World Geography, Travel God’s World Cookbook, and HIS Story of the 20th Century. You can check out her books, curricula, unit studies, and Bible studies at PowerlineProd.com. Read her blogs at PowerlineProd.com and listen to her at Finish Well Podcast.