You might not think that kids have much problem with debt, but many kids never get to experience money management skills until later in life.
The amount of debt held by young adults under the age of 30 is rapidly becoming an epidemic.
Besides student loan debt, many college students and young professionals are being sucked into credit cards and loans that are making their financial futures riddled with debt burdens.
The best way to keep young adults out of debt is to take an active approach early on.
Prevention Is Key Studies show that over two-thirds of all Americans are considered financially illiterate, meaning have poor money management skills and a weak concept of the wise use of credit.
Good money management skills start at home and should be taught early on.
Take your teenager, for example.
They are becoming more independent and mature every day, which means that money will become more important in their lives very soon.
Many parents fail to teach their kids about budgeting, saving or even how to use debit or credit cards, a major concern among financial experts.
If you haven't already, make a plan to sit down with your growing teen and show them how finances work.
Help them open a checking and savings account.
Develop a system for them to earn money if they don't have a part time job or make money through small jobs in the neighborhood.
Teach your teen how to deposit money and demonstrate the importance of saving a little with each deposit.
It is also important that your teen learn how to track their expenses and subtract money from their balance registers.
Create a list of spending rules for your teen and give them a debit card.
Mostimportantly, let them have some freedom with the card to engage in purchases that fall within their set limits.
It is important that they get to experience how quickly purchases can take away from their balance and, perhaps, even overdraw their account.
The consequences of overspending are a valuable lesson that is far better learned under controlled circumstances than when they get into the real world on their own.
Management Is Practical If your child is already grown, in college or the professional world it still isn't too late to teach them about staying out of debt.
First, stay in open communication with them.
Don't force them into giving you details about their finances, but do make discussing finances a priority.
Next, set an example.
Take initiative to get yourself out of debt or lower your debt burden by developing your own debt management plan.
Discussing your plan will open up the conversation and may motivate them to participate.
Last, offer your assistance and be willing to help without overcrowding your young adult.
Their finances are ultimately their responsibility, but taking an active interest and offering a structured plan when they need help can prevent them from using credit to pay other expenses or balances.