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Let Your Kids Go Into Debt

Let Your Kids Go Into Debt
Credit: Annie Spratt - Unsplash

There are a lot of reasons to give children allowances. Letting children earn and manage small amounts of money teaches them about budgeting, spending, saving, and giving.

Plus, if you’re in a home where allowances are tied to chores—or a home where allowances are given freely but extra money can be earned by completing certain tasks—children learn what it feels like to earn fair financial compensation for a job well done.

However, you should also teach your children what it feels like to go into debt.

On Medium, Julie Morris explains why she decided to let her 8-year-old daughter go into debt to purchase a pair of shoes:

I haven’t let them ‘borrow’ till now. How will that affect eldest daughter? Will she feel the weight of the debt burden from those glittery new sneakers that she couldn’t really afford yesterday? Will it dim the joy of wearing them to church tonight? It might.

I hope it sucks some the joy out of her weekend.

While the idea of deliberately “sucking joy” out of your child’s weekend may seem harsh, there’s a bigger lesson at play here. By requiring her daughter to spend the weekend doing extra chores to pay off her debt, Morris is teaching her 8-year-old what it feels like to do work in exchange for money that’s already been spent.

Or, as Morris puts it:

I hope she despises earning money she won’t ever see. I hope she regrets her shoe purchase, with every second of the chores she’ll slog through today!

Now, you know your kids better than I do—there are probably some children who wouldn’t mind working off a debt, and it’s a rare child who hasn’t tried to negotiate an advance on their allowance at some point.

As your kids get older, they’ll start paying attention to the way you use debt, whether you put purchases on a credit card or make monthly car payments, and may correctly put together that some debts are more valuable than others. Like it or not, a lot of us use debt to improve our lives—it’s when those debts become insurmountable that we start to have problems.

But teaching an 8-year-old that extra money today means extra chores tomorrow is still a good lesson.

Whether it sucks the joy out of the weekend, or whether they look down at their shiny new shoes and decide it was worth it.