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#9 How to Teach Your Kids About Debt

Shakespeare is wonderful, but "neither a borrower nor a lender be" is an outdated quote in today’s world. 

In episode 9 of “How to Teach Your Kids About Money,” Alec and Julie discuss how it’s essential to teach kids about borrowing and lending responsibly. They talk about the benefits of leverage and borrowing, and how it's also essential to teach kids the difference between debit and credit. But most importantly, they discuss how parents can easily teach their kids about responsible borrowing, even if they’re not experts themselves. 

Some Episode #9 Key Takeaways:

* It’s important to teach kids about borrowing and lending in a responsible manner and to differentiate between what is okay to borrow and what is not.

* Teaching kids about borrowing and lending can start from a young age, and should include familiarizing them with the process, including penalties and repayment.

* Using credit cards responsibly can have benefits, such as booking flights using miles, but it is important to teach kids about not overspending and about paying off debts.

* The Cents of Responsibility "credit bill,” which is part of the Elementary Starter Course, can be a useful tool in teaching kids about borrowing and lending, but it is important to use it in a controlled environment (i.e. your family) to avoid negative consequences.

 

More on the Cents of Responsibility Credit Bill System:

 

  • Young kids don't usually carry around their cash and often need to borrow cash from parents to spend their allowance money. 
  • When they get home from making a purchase using their parents’ money, kids write on the fridge how much they owe, so they can pay it back on Allowance Day. 
    • There is a penalty if kids don't pay back on time, which encourages them to be responsible with their finances.
    • Consistency is crucial in the Cents of Responsibility Credit Bill system, as it fosters better relationships and avoids fights about money.
  • Siblings can also practice using money with each other. For example, Julie’s kids, John and Cassidy, do not borrow from each other but pay each other with money for small favors.
  • Alec’s daughters lent one another $30 in exchange for a $5 fee instead of borrowing from their father and paying a $10 penalty.
  • Alec and Julie share personal stories of family members who had to navigate debt and how they want to help their own kids avoid that situation. 
  • They discuss the Cents of Responsibility Elementary Starter Course, which provides step-by-step instructions and resources to teach kids financial responsibility. They also encourage parents to use the program and share it with others to help spread financial literacy.

 

Join us at COR as we explore teaching our kids about money and creating a platform for financial practice and familiarity for your kids.

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In this episode:

- Alec Lindenauer, COR's Chief Allowance Officer and Financial Advisor

- Julie Frans, COR's Chief Community Officer

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Want more resources to teach your child about money? Check ‘em out here:

💰How To Teach Your Kids About Money Podcast:

https://www.centsofresponsibility.com/podcast?utm_source=podcast&utm_medium=organic&utm_campaign=ep9

💰Cents of Responsibility Blog:

https://www.centsofresponsibility.com/blog?utm_source=podcast&utm_medium=organic&utm_campaign=ep9

 

💰Cents of Responsibility YouTube Channel:

https://www.youtube.com/@centsofresponsibility

 

If you’ve thought about taking a complete, comprehensive course to learn everything you need to know about starting your kid with allowance, and then using it to teach them all about money, check out our flagship course here: https://www.centsofresponsibility.com/CORCourse1?utm_source=podcast&utm_medium=organic&utm_campaign=ep9

Also, follow us at these places below and say hi!

💵 Website: https://www.centsofresponsibility.com

💵 Instagram: https://www.instagram.com/centsofresponsibility/

💵 Facebook: https://www.facebook.com/CentsOfResponsibility

💵 TikTok: https://www.tiktok.com/@centsofresponsibility

💵 YouTube: https://www.youtube.com/@centsofresponsibility

If you want to know more about Alec and the rest of the team, check us out here:

https://www.centsofresponsibility.com/about

In the meantime, teach cents-ibly!