Sunday, March 09, 2008

Root of Debt in America?

Last night we picked up Super Smash Brothers Brawl for the Nintendo Wii. DH was excited to be playing. FWIW, I don't think we were the oldest people there without a child, but I guess this is what being DINK is.

So last night in line there were three registers working, however one register only took debit or credit cards. So we ended up cutting to the front of the line, because most kids were buying the games with cash (probably using their allowances).

Anyway this upset DH, who was outraged that so many kids were using cash. Sigh. He didn't understand that most children in the US don't have checking accounts linked to a debit card. Apparently in Canada this is very common and called "children's account." Apparently in Canada most children learn about checking accounts, bills, and credit cards by high school.

But in the US, most children are exposed to checking/savings accounts and credit cards when they go to college. And they learn all the wrong information about it from friends, rather than the proper information from their parents. They believe that that credit cards are free money, checking accounts never run out, or how to budget.

He suggested this the reason why the US is in so much fiscal trouble. That people here get a late start in financial responsibility. That is learned from experience and friends, instead of parental guidance.

Do I agree? I'm not sure, but potentially yes. I was a fortunate person who had all the same experiences as DH because my mom wanted to be sure I was a prepared adult. So the CC trap, budget, checking accounts, etc were not a big deal. I had a firm understanding and knowledge about money before I became and "adult".

So perhaps DH is right. Perhaps it is due to the fact that American's are ashamed about their financial knowledge and don't enlighten their children early enough. Or are unaware they even should be imparting financial wisdom, rather than waiting till their friends tell them the wrong information. What do you think?


Mom said...

I agree that we need to start teaching out kids way earlier about how money works. I know I wasn't taught one thing about money as a kid, I had to learn it all by trial and error.

No Debt Plan said...

I definitely agree... we force it on the parents to teach finance to our kids. That's a good idea in theory -- except that the parents can't manage their own money.

I've thought about tutoring in this area, but I don't think parents would pay for it...

Jim said...

My parents taught me stuff about money at an early age and I had a savings account for a long time. Later into high school I got a checking account and an ATM card (just for cash, check card wouldn't exist until later). Being a math person I made sure to keep my checkbook register right in line with my account. When I started to establish credit though, more wonderful advice from my parents (sarcasm), I was losing track of a system I was good at. College didn't help because I couldn't pay off the balance on my credit card anymore due to lack of actual money. That's where the mentality of paying it off later when I get a job came in.

Learning about money, checking accounts, savings, budgets, and debt at a young age would be a positive thing. I know Dave Ramsey is offering a new program for teenagers called Generation Change so they understand the freedom of debt free at an early age. It will take time for younger generations to grow up and become the consumers of tomorrow. Hopefully the major difference is they won't finance everything because they'll have money to buy stuff.

Anonymous said...

I don't understand what's wrong with the kids using cash. Don't we want to discourage people of all ages buying things on credit? It seems to me these kids did well by saving up enough money to afford what they wanted.


Anonymous said...

I have to agree with anonymous - debit cards and checking accounts are just another way to manage cash flow - it still doesn't change the concept of spending within your means or saving for a rainy day.