There is no reasonable way to shield your children from the glitz and glamour of easy credit. It’s everywhere with all its seduction and allure. So if you cannot shield, neutralize!
Years ago, I watched an effective television documentary in which juvenile delinquents went into prisons, drug-treatment centers, and the like to observe the dark side of the life they were heading toward. The intention was to scare them out of their wits—to scare them straight.
In the same way these kids were jolted by reality, you can scare your kids out of a life of consumer debt by revealing the seduction and lies behind the glamour.
TELL STORIES. There is nothing as effective as true stories when it comes to scaring kids about the dangers of consumer debt. Share credit horror stories with them as often as you can (stick to stories you read in newspapers, newsletters, or other published sources rather than gossip). Let your teen or older child draw conclusions and suggest what would have been a better course of action. Let them be the ones to point out how foolish it is to live beyond your means. Follow up with an explanation that when people are not financially knowledgeable, they are easy marks for the debt trap.
EXPOSE THE “NOTHING DOWN, NO PAYMENTS” MYSTERY. Perhaps you’ve wondered about the currently popular “nothing down, no payments, no interest” kind of advertising. You’ll see this in newspaper ads and store windows, particularly around the holidays. What a seductive yet deceitful come-on! You must carefully read the fine print to figure this out, and even then it can be confusing.
Here’s the reason stores love to advertise this way. Most people who want these deals can’t qualify. But the advertisement catches their attention. Within seconds, they feel entitled to have new furniture, an electronic item, or even a new car. Emotionally, they’ve moved it in and are enjoying it. So when they get the bad news, they’re ripe to fall for a more expensive deal, which the salesperson is quick to offer.
DEGLAMORIZE SHOPPING. Here’s a great way to get your older kids to think realistically about store, mall and online shopping sites.
Start with a credit-card application from your mailbox. Have your child figure out the terms. Now the two of you go online, or grab a mail-order catalog and go wild!
The rule is you can “buy” whatever you see but only for a predetermined period of time. Write down everything you’ve “ordered” with your pretend card. At the end of the time, add up the total cost plus the shipping and handling of all the stuff you ordered. Now get your financial calculator and assess the “damage.”
Using the total as the balance and the payment terms on the application, find out how many years it is going to take you to pay for this shopping spree. Whew! You’ll be mighty glad this was only a game. And just think of all the stuff you won’t have to take care of—or return because you’ve had a reality check.
TEACH YOUR KIDS ABOUT GIVING. It’s a universal principle, a simple concept: Give back part of everything you receive. Giving exposes our lives and our finances to something supernatural. Teach your kids always to give back a percentage of their income before they save or spend. Brainstorm with your child about good reasons to give. It helps people who are less fortunate or who are sick. It helps volunteers and people who are giving their lives to fulfill an important mission. It helps you focus on the needs of others.
Neutralizing the glamour of easy credit with you kids is going to have an unexpected bonus—they will develop financial intelligence.