Talk About Debt… with your kids – the importance of preparing the next generation

There is nothing we wouldn’t do for our kids. We work to put food on their plates, we take them to school, and we prepare them for the future. For many parents, preparing children for the future involves teaching them how to cook, how to clean, and how to live healthy lives. Their physical wellbeing, however, is not the only education a child needs and, increasingly, their financial education is being neglected.

For some experts, this lack of financial education is the foundation of the current debt crisis faced by the UK. They argue that there is a whole generation who were not prepared for 21st century capitalism. A lack of essential skills, such as budgeting, combined with increasingly easy access to credit has resulted in millions of people falling into problem debt. So how can you help your children avoid this trap, even if you are one of the millions who already have?

Age Appropriateness

The first question to ask yourself is ‘What can my kids understand and handle?’. As well as considering their mathematical skills, it is important to assess what your children will be able to comprehend. Suddenly announcing your debt to young children could easily scare them, even if you aren’t currently struggling with your debts.

Start simple and theoretical. For young children, stick to fictional examples and use it to practice their math. Older children can benefit from real life practice, such as through being told to save up for a toy they want. Teenagers most need a financial education, and it is at this stage that you can introduce more complicated ideas, such as credit. Once again, it is helpful to start simple; perhaps by opening their own bank account and explaining financial products like mortgages to them. But older teenagers can seriously benefit from your life experience. Sit them down and teach them how to apply all that you have taught them to the real world – to bills, to taxes, and, yes, even to debts.


Being in debt makes most people feel like they are about to have the rug pulled out from beneath them, and this can make talking about it incredibly difficult. Talking about the situation can make it feel too real and is often the biggest obstacle for people when they need to seek help. This can be even worse with your own children – you want to be their ‘hero’ and you worry that learning about your financial situation might scare them.

This is where the words and description of your financial situation is most important. It doesn’t matter if you have made mistakes as long as your children can then learn from them. Explain to them how you got into debt in the first place and what went wrong, but then make sure you explain what you are doing to solve the problem. Perhaps you didn’t budget well enough in your youth, but now you have a detailed spreadsheet that maps out all your income and expenditure, including your debts, and you can see a time when you will be debt free. Or maybe you went through a difficult financial emergency which almost made you bankrupt, but now have an Individual Voluntary Arrangement which is allowing you to pay off your debt in 6 years. Honesty is usually the best policy.

Get help

But what if you can’t think of any way to make your situation positive? No lessons learnt, no hope for the future? If that is the case, it is very likely that you need to seek help. It is okay to admit that you need a financial education just as much as your children do. Whether it is learning how to budget or researching and understanding debt solutions, there are plenty of ways that you can make your outlook positive.

You could include your children in this process of discovery, if you think they are old enough to understand. It could help you to explain why you need to have a ‘staycation’ this summer, instead of a holiday abroad, or get them to help you budget in preparation for an affordable Christmas.

What to teach them

Don’t feel discouraged by the vast number of financial topics that you may feel you need to cover. Focus on building their knowledge slowly and soon enough they will have the tools they need to research and understand things on their own. To get you started, here is a list of some of the personal finance topics that your kids should be able to understand before they leave the nest:

  • Budgeting
  • Financial Emergencies
  • Saving and saving products
  • Bills
  • Rent
  • Council Tax
  • Income Tax
  • Car Finance
  • Mortgages
  • Loans
  • Credit Cards
  • Interest Rates
  • Where to find advice

This last topic ‘Where to find advice’ is the most important topic you can teach your children. Instil in them the ability and drive to research solutions for their own financial concerns, and they will soon be able to survive anything. Of course, they can always rely on you to advise them as best as you can, but where do they go for the questions you don’t know the answers to?

Citizens Advice Bureau is a fantastic resource for all sorts of legal, governmental and financial life queries and, as ever, we are more than happy to provide specialist debt advice.

To contact our friendly team of advisors, call 0808 156 7730, or to read more about your options for dealing with debt, click here.

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