Talking to children about debt
The boy next door who borrows money for admission to the swimming pool because he's forgotten his wallet, or a friend who needs money for the cinema: Debt quickly becomes a topic of conversation at the family dinner table. In his column, Daniel Betschart of the organization Pro Juventute explains what to focus on and how to raise children's awareness about debt.
Of course, children and young people are only indirectly affected, if at all, by personal loans, mortgages, and leasing. But they too come into contact with various forms of debt, for example with their mobile phone, which is often paid off in installments through a monthly sum with the subscription. The same applies if they borrow money from friends or their parents because they don't have their pocket money on them, or it's already run out. Hardly anyone talks about debt in such cases, but the money is still "owed."
Children borrow and lend money – it's normal
Many children and young people report that lending money in their circle of friends is normal and is not a problem provided it's not "exaggerated." For some, the cost of candy at a kiosk is okay, while for others the same applies to borrowing money for new shoes. It's a matter of give and take, and in the long run it balances itself out within the group or circle of friends. But even among friends, there's a limit. Often, this is reached when it's clear that an outstanding amount is not automatically offset, and so the amount has to be repaid as quickly as possible.
Discovering your own limits means listening to your feelings
In order to recognize this limit, children and young people can learn to listen to their feelings. An uneasy gut feeling tells us that there is a degree of risk involved with debt. This feeling can arise both in the person lending the money and in the person borrowing it. Depending on who we lend something to or who we owe money to, this sense of insecurity can become stronger. Therefore, it is this insecurity that is the real difference between problematic and apparently unproblematic debts.
An uneasy gut feeling tells us that there is a degree of risk involved with debt.
Daniel Betschart, Pro Juventute
Talking about debt makes people more responsible about dealing with it
But debt is hardly ever wholly unproblematic. Every debt bears a certain residual risk, as there are factors over which we have little or no influence. Maybe the friend for whom my child bought an ice tea suddenly receives no pocket money or can't remember all the people he or she needs to pay back. It's important for parents to talk to their children about all aspects of money if possible, including debt, so that they learn to handle money responsibly. The ideal moment for this does not depend on the age of the child, but rather on whether they have questions or show an interest.
Before getting into debt, you should always ask yourself whether you can afford the risk. This applies to adults as well as to children and young people. Having your own finances under control is another key factor: Do I have an overview of my spending? Do I have a budget and do I know what costs lie ahead? Do I have money set aside for unforeseen events? Parents can discuss such issues with their children and find out what the effect of being in debt might be.
A column by Daniel Betschart