If you are a parent carrying debt, you may already be keenly aware of how that stress gets communicated to your children, who are watching and learning from you.
The good news is that you can support them and take steps to get out of debt at the same time. Gain strong family financial literacy skills that will benefit you and your family in the long run.
One of the best tools in your quest to pay down debt is becoming financially literate. Educating yourself on your finances means understanding your options, which makes you able to plan your debt repayment strategy more effectively. Involve the kids while you are learning about your finances.
“As your child’s first and most important teacher, you have many valuable lessons to teach them. When it comes to your finances, your kids mimic many of your attitudes and practices as they develop money habits of their own as adults. There is no time like the present to learn about finances- for everyone in the family,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
Here are some tips on how to get your family up to speed on financial literacy.
Plan a family budget
You don’t need to go into detailed spreadsheets with your kids about your income and expenses. Depending on your children’s age(s), you can either involve them in setting spending for various categories or create something tactile or highly visual to represent what you can spend, like a chart with colours or blocks representing different things.
Also communicate the importance of tracking your spending, so plan monthly family meetings to see how you’d done on your spending vs. your targets. You are teaching them about money management, but also about the value of setting goals and the pride in the accomplishment of achieving them.
Include the whole family in your shopping errands if possible. One note- make sure that you leave yourself enough time to make this lesson effective each and every time. Repetition is what will instill habits later in life.
Before you leave home, make sure you have a detailed list in hand and the cash on hand as well to pay for your purchases. When you get to the store, give everyone a portion of the list. Demonstrate that you are paying in cash. When you get home, show how much cash you have left in your wallet.
“Have your older kids start coupon clipping and scouring out deals online for you. Becoming a bargain hunter at a young age is a great life skill to have,” says Schwartz.
The importance of savings
One frequently overlooked tool in the battle against debt is savings. If the goal is to pay down debt, people tend to direct their available cash towards payments. However, compiling savings (even if it is just a little) is your best bet to paying your debt down and remaining debt free.
Communicate this to your children visually- either with a savings jar that you visit each pay period or with some sort of tracking tool, like a chart or “thermometer “that measures your saving progress. Hang it somewhere prominent in your home where it will be seen often.
If there is any lesson to impart to your children, it is the relationship between them and their money. Even if it is just a little money, have them manage it, especially around the things they want. Have them use the same principles that you apply in your own budgeting, breaking out their “pay” into spending and savings. Real life lessons are the ones that stick.
Does the high cost of raising a family have you struggling with debt? Moving forward with paying your debt down will help. Call one of our trained credit counsellors at 1-888-294-3130 or check out our online debt analysis.