A new survey suggests that over half of Americans have gone into debt for their kids’ extracurriculars—and that might not be such a good idea.
According to CompareCards.com, 62% of American parents have picked up debt in order to let their children practice soccer or ballet. Nine percent of those parents owe more than $5,000, and nearly a third owe more than $3,000.
Here’s where it gets really interesting. The survey reports that the majority of parents who pay for their children’s extracurriculars—whether or not they go into debt—believe these activities will help their children earn money in the future.
The more you spend, the more likely you are to think it will pay off – 90% of parents who spend at least $4,000 per year think their kid will one day earn money off of it, compared to 75% of parents who spend less than $1,000.
94% of parents currently paying off debt for their child’s activity think it will lead to future income.
In other words: parents aren’t putting their kids into team sports or sending them to dance camp just because they want to encourage socialization or team spirit or exercise. They’re hoping the extracurriculars will pay off. Literally.
Sometimes these types of activities do help children earn money in the future. Plenty of kids get college scholarships for their ability to play lacrosse or violin or basketball; my 16 years of piano lessons enabled me to pick up a side hustle as a choral accompanist.
But not every parent who goes into debt to pay for their children’s activities will see that kind of payoff in the future.
As CompareCards.com puts it:
Despite what 81% of our respondents say, most kids are never going to earn a dime from the activity that’s their passion. Some may eventually make a little bit of money on the side, like a musician playing gigs around town for some side cash or a former athlete refereeing recreational league games for a few extra bucks. Others may even make a modest living following their passion as a coach or teacher. A very select few might even be the next LeBron or Beyoncé. However, the truth is that most won’t, and while you never want to discourage a kid from following his or her aspirations, you owe it to yourself to make sure that your kid’s pursuit of a dream won’t derail you and your family from your dream of financial stability – and even retirement.
Have you gone into debt for your children’s extracurriculars? How much debt would you be willing to take on before you told your child that they had to quit the travel team or return the rented cello? Would it be different if your child was extraordinarily talented or extremely motivated?
These aren’t easy decisions, but they’re something many parents will have to think about at some point—and if you’re the parent who’s worried that you’ll be crushing your child’s dreams by not letting them pursue a specific interest, remember that when your children are older, they can sign up for adult ballet classes or after-work softball teams on their own, and it’ll be fine.