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Parents Need to Teach Children Financial Responsibility

by on November 16, 2007

I recently read a question that a reader posed to a financial expert about his college-aged son. The reader’s son had a mind-boggling $20,000 in credit card debt and didn’t have any kind of income to help pay the debt off. He wanted to know if his son could qualify for student loans in order to pay off the credit card debt and wanted to know if he would need a co-signer to do so. The reader claimed that his son wanted to avoid bankruptcy and was looking for a bit of guidance. 

In general, we probably don’t do a good enough job teaching our children financial responsibility at an early age, but stories like this are certainly not encouraging.

My first thought when reading this story was “wow” – this kid is already setup for financial failure. Second, someone needs to cut the apron strings and let Fredo fly away on his own. Obviously, Dad was more concerned about the debt than what was best for his son. Otherwise, why did Dad write the letter and not the son? The financial expert that responded to the question made a similar observation.

But, I will take it a step further…how is this kid racking up $20,000 in credit card debt and not have a job? Who helped Fredo get this much credit in the first place and who was making the payments if he didn’t have a job? Finally, Dad said that Fredo didn’t have any student loans, which leads me to believe that he was footing the bill – from the sound of it, I’m fairly certain that Fredo isn’t going to school on a scholarship.

This should serve as a wake up call to all of you parents out there – you are not doing your child any good when you’re taking responsibility for his indiscriminate credit card bills. Cleaning up his financial messes without him having to suffer the consequences is not helping him. The financial expert made the observation that had to be smacking everyone in the face – “Get a job [Fredo]“. Children need to have a connection between earning an income and spending that income – a lesson that his parents have not instilled in him, yet.

The expert was much more diplomatic in doling out advice to Dad, but reading between the lines reveals the cold, hard truth – make Fredo take personal responsibility for his financial situation.

For those of you who might be wondering it’s a horribly bad idea to take out a student loan in order to pay off credit card debts. In the history of bad financial ideas, that idea is undoubtedly on the Top 10 list. These loans typically stipulate that the money be spent toward school purchases anyway and credit card debt certainly doesn’t qualify.  But nice try…
Above all, parents need to teach their children to take ownership of their financial affairs as early as possible. This might help parents to avoid raising yet another young adult incapable of taking financial responsibility for themselves.

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