My 8-year-old is in Debt

Julie Morris
Apr 20, 2019 · 4 min read
Child holding jar of money.
Child holding jar of money.
Photo: @crystalmariesing via Twenty20

I am preparing myself for a tough weekend. Today, my eldest will wake up for the first time with debt, on her beloved chocolate-filled Easter weekend, no less.

Like any reasonable lender, I’ve given her two days to earn the $12 she spent over her means yesterday.

After learning the hard way about finances, and like the vast majority of us, having had my own challenges when it comes to translating good financial advice into action or behavior change, I’m eager to let my kids experience financial lessons while they’re still young enough to leverage their still-forming synapses build good habits.

Plus this system lets me offload some housework.

Letting our 6- and 8-year-old earn money has been interesting. Exhausting. We’re past the honeymoon period of, “look, small daughter! You can earn money for this! Dishwasher unloading time!” It often ends up being work for my husband and I than for them — tracking daily earnings, gently reminding them to knock out tasks, and figuring excuse what to incentivize. We even pay our kids to brush their teeth (Knowing the burden of dental bills for poor oral hygiene, our philosophy is pay now or pay later).

But my elementary-aged kids are learning to weigh financial decisions now, while the ramifications of mistakes are small, the successes are easy, and their earnings are not the only thing between them and a visit to the food pantry.

When my daughter wakes up in debt tomorrow, I hope it affects her. I hope it sears the memory into her brain and she recalls it the next time she considers buying fancy footwear.

Before you judge my glee at her expense, please understand it’s part of the plan. We’re teaching financial understanding, offering myriad opportunities to learn here, before they leave home.

Here’s some of what we lean on to set up our children for future financial success:

1. Work with the brain. It’s wired for success — but only if you understand how to leverage it.

Understand the role of dopamine. For example, why does your iPhone pull you in like cocaine when you’re stressed? It senses your heightened state, and knows your smooth-glassed iPhone is just a foot away… even the touch of your phone glass causes a significant dopamine surge. Up to 2,600 touches a day sound right to you?).

A few YouTube videos on the brain and dopamine, and you’ll understand more about you and your urges. Search for ‘neuroscience and spending habits’, or ‘behavioral science and stress’ to know more than your friends.

2. Take advantage of the brain’s deep need and desire to create habits.

Why do what you do? How can you work around your brain’s favorite donuts and overspending? Charles Duhigg writes about the glaring reality of cravings, behaviors, and how your chances of success or failure are fueled by habits.

3. Let them learn in action.

Our kids earn money, and can save or spend, just like they will for the rest of their lives. Why not start small and start now?

4. Give them real control.

I let our eldest daughter wander Target, counting up prices, subtracting sales, deliberating on hats and shoes. The youngest and I trailed patiently (until hunger struck, at least!), to give her the space to figure out if she could fit her purchases into her budget.

5. Encourage skin in the game.

I avoid buying anything for my children that’s not a need. But that line between need/want is tough. Did they need an Easter basket? Did they need new socks? Or are these wants? They have socks. But not if the socks are in laundry hampers, in a backpack, in… wherever. If they want socks, they’re helping make it happen, whether laundry or a purchase.

As we planned our Costco list, my youngest daughter, deliberating a purchase of new socks said, “I’ll have to see how much they cost.” I was elated. Time will tell if they take better care of their toys if they waited to buy them after saving hard-earned cash.

6. Give them their own debit cards.

Yup, my kiddos have debit cards, with their own names and even a photo on them. We currently use the Greenlight Debit Card for Kids, and can use them just like your normal debit card — online, Target, etc. The girls rocked self-checkout yesterday for the first time.

So back to my original question: Why let my child go into debt?

I haven’t let my kids ‘borrow’ until now. How will that affect my 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.

Because of little lessons on debt, she might avoid bigger mistakes. Perhaps her first business loan won’t be denied (great ideas can’t make up for a poor credit score). Perhaps she’ll sleep better, fight with her spouse less, have hobbies instead of a second or third job in the evenings.

If our efforts are successful, our kiddos will have significantly reduced their chances of divorce, obesity, and other major health challenges. They will have greater chances of mental health, and have the potential to be happier. What’s the biggest source of stress in your life? In the lives of the vast majority of Americans? That’s right: money.

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

Happy Easter, sweetheart. Here’s a mop, some clean clothes to fold, and dishes to wash. I promise you’ll thank me later.

Maybe, just maybe, I’ll let you sell me your chocolate from the Easter Bunny.

Long post was inspired by a great write up by Nicole Heckman on Medium.

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