Today, we've got a special treat. Phil Bradford is a financial blogger in New York. He's got a solid take on educating Millennials and their children on personal finance. Check him out at https://www.facebook.com/philinthebanks
Educating the Children of Millennials on Money
In 2013, a study, of various age groups showed that children (born between 1980-1984) paid off their credit debt at a much lower rate (24 percentage points) than their parents and grandparents.
Moreover, during the same stage of life, children owed about $8,156 more debt than their grandparents.
Why is the younger generation accumulating debt?
It is relatively easier to get credit
According to Lucia Dunn, co-author of the study and professor of economics at Ohio State University, it is easier to get credit today. The millennial generation is also incurring more credit card debt than previous generations. However, they are not repaying it, and therefore, they may need to pay back the dues for the rest of their lives.
Parents want to protect their children from suffering
Parents don’t want their children to suffer as they did, neither physically or financially. Parents are repaying car loans and their children’s insurance policy premiums. As a result, the children are not able to manage their finances properly and also don’t learn to live within their means.
Moreover, when parents are taking out loans to fund their children’s studies, the younger ones often interpret that loans are acceptable. They rarely understand how one has to manage money to repay loans.
Lifestyle cost has increased
The cost of lifestyle has increased in comparison to the previous generations. However, each generation has its own challenges. We need to learn the appropriate strategies. Along with learning financial literacy, we must also practice self-discipline.
As a solution to the above-mentioned points, millennials & their children should learn to manage debts, especially credit card debts, properly. They also need to learn how to live within their means. When parents are taking out loans to fund their children’s education, they should involve the kids in the conversation before taking out student loans.
If the children learn how to manage money properly, it will automatically improve the debt behavior of the young generation.
Here are some tips for the children of millennials to manage debt and finances properly.
Schools should offer financial education
A majority of students believe money management classes will have a good impact their generation. The schools should offer financial education for the students. They have also stated that money management is more important a subject as compared to science, mathematics and social sciences.
However, if your school is not offering such a course, there are many crash courses on money management. Millennials can enroll in such a crash course and learn the correct money management techniques. They can also enroll their children when the time comes. It will systematically change the debt behavior of younger generation in a positive way.
Educate yourself on how to manage credit better
To manage credit better, first of all, you need to have a clear knowledge about your credit situation. To do so, check your credit reports and scores at least once a year. This brings to light any fraudulent activities in any of your accounts. It also helps you find inaccurate items in your reports which need to be disputed and corrected.
Millennials are racking up more debt due to bad credit decisions, as a result they fall into the vicious cycle of debt.
If they learn to manage it properly, they will be able to take out mortgage loans at favorable rates; in short, they won’t experience debt problems and will be able to enjoy a good lifestyle.
Millennials should also feel free to talk about their debt problems. The ultimate mission is to lead a debt free life. So, you can seek professional help if you’re not able to manage your finances on your own, or if you’re experiencing debt problems.
Another important thing - You should treat yourselves occasionally to motivate yourselves to be on the right track. Always practicing frugal livingand cutting down on expenditure may leave you frustrated; but, if you’re able to motivate yourselves, you’ll be able to achieve financial success in the long run.
Phil is a financial web enthusiast. He has expert knowledge about personal finance issues. His passion for helping people who’re stuck in financial problems has earned him recognition and honor in the industry. Besides writing financial articles, he loves to travel and cook. For any inquiry contact him @ https://www.facebook.com/philinthebanks