Kids Take Lessons From National Debt Binge

‘Don’t do as I do, do as I say,’ could be the governmental finger wag lecturing kids on fiscal fitness.

How can we expect kids to learn about credit/debit and healthy financial management skills with restrained realism when we’re handing over the national credit card with a ‘put it on the tab’ mall mentality?

It’s becoming more difficult by the day to dodge the dicey questions of ‘who will pay’ to clean up this economic mess. (um, you and your peers dear child-o-mine, sorry, hon, the adults got carried away) It’s like a free-wheeling Vegas spender deciding to ‘double down’ on borrowing and spin the roulette wheel hoping that by chance economic growth will kick in and knock back deficit spending.

I’m no economist, and I’m definitely not a gambler, so this whole financial nightmare our country is in has a ‘just pinch me to wake up’ feel to it that would sure beat explaining this horrific ‘reality show’ to kids…

After all, I was raised with a mega-frugal depression era dad that STILL thinks bread should be 15 cents and will walk away from 99-cent bananas in self-denial mumbling that the ‘price is too high.’

In recent years my mom and I have let him enjoy his blissfully surreal approach to shopping since he rarely goes into stores and it’s just easier to enable the fantasy…(that’s Cub and Beth Jussel at left, you know what the tee-shirts say, ‘watch it, or you’ll end up in my novel’) When it comes to hiding economic scenarios from uber-alert children taking cues from our every move, I’m afraid we’ll have to opt for truth. And fast.

Child psychologists, financial advisors, and media literacy specialists are stepping all over themselves to get in the media spotlight with advice on “how to handle financial woes” and the economic/credit crunch crisis with kids…

I’ll actually be doing a follow up piece on that later, but most agree TRUTH itself is a good place to start, with age appropriate debt talk to soften the blow on a ‘need vs. want’ discussion basis.

I’d like to look at the disordered, dysfunctional binge-n-purge financial model our nation has put into play. Why? Again, because “kids are watching.”

The ramp up to the media corollary between debits, credits, kids and consumption has been skyrocketing as commonplace for quite some time…Since adults are currently proposing to borrow $700 billion without ANY IDEA of how they’re going to get that money back…why are we so surprised that children are modeling the same behavior?

Carmen Wong Ulrich, author of the book Generation Debt was interviewed earlier this year in US News & World Report about how to get out of debt…

Student loan resources like Generation Debt.org give helpful tips on consolidation and legislation, as well as coping tips for struggles and hardship…

And this New Statesman article tracks a couple of twentysomethings through their credit card crises’ amidst cues of “spend today and forget about tomorrow”…attributing much of the binge mentality on societal shifts and media and marketing’s influence favoring consumption as an ‘economic stimulus.’

The New Statesman article, Drowning in Debt, gives a poignant snapshot of the cultural shift that shrugs off a $700 billion bailout as ‘situation normal’…

The follow-up responses are equally insightful, as former students that reduced their debt to zero call for accountability and financial literacy instead of liquidation in a kids’ financial playground of ‘do-over’ style.

Reporter Stephen Armstrong writes,

• “There used to be a sort of social stigma attached to being heavily in debt,” explains David Chater, head of policy for Rainer. “In the past five years I’ve seen that stigma vanish. Young people are sold the idea of borrowing so heavily these days – on TV, online, on the high street and even by their mates – that they think nothing of it…In part, student loans are to blame. Students themselves think: ‘I owe so much, what does another grand matter?’ Even those who are not in higher education know someone who is, so they see the £2,000 they owe as nothing compared to their mate or cousin.”
• 
  
• “Linda Jack, youth adviser and head of the Financial Services Authority’s working group on young adults, reinforces this: “I’ve worked with youth for over 20 years and I’ve seen young people’s attitudes change more and more into passive consumerism – I want it, I want it now and I can get it now. The link between effort and reward has disturbingly been lost for a lot of young people. Trying to get through to them that if you put the effort in and save, you have that sense of achievement, as opposed to paying more for it in the long run by putting it on your credit card because you wanted it now . . .There is a cultural issue here: we have changed culturally in terms of expectations.”

I’d submit that same cultural shift in expectations he speaks of applies to adults even more…Our nation’s leaders, our ‘role models’ have essentially hammered a “For Sale” sign in the front lawn of our country as Japan and China prop up our stability with U.S. treasury holdings of over $592 billion and $502 billion respectively in those two countries alone.

Brad Setser of the Council on Foreign Relations (ahem, sponsored in part by Morgan Stanley, btw) was quoted in the Dallas Morning News as saying, “Count the paper issued by Fannie Mae and Freddie Mac along with debts bought in London’s financial market that aren’t identified in the official statistics, and China’s holdings look more like one to 1.3 TRILLION…close to 10% of our GDP!”

Yah, I know…those numbers are Monopoly money when they get to that level, and if you don’t know what GDP means, it will ‘hammer home’ my point that kids AND adults need financial literacy to avoid making these freakin’ mistakes time and again.

Whether you’re a student, a parent, or any variation of civic-minded ‘responsible good citizen’ it gets rather old to have one chunk of society pulling the weight by ‘minding their Ps and Qs’ and the other side blowing it off in spendthrift style. It’s exhausting and disheartening when the ‘dirty dogs’ keep getting the bone by just burying it a bit deeper in a shell game…sigh.

In a recent chat with Millennial activist Alex Steed, who’s about to hit the road as a youth reporter with his worthy project Millennials Changing America: The Next Generation of Organizing (chip-in here) he asked his Facebook fans ‘what issues’ were most important to “Make Something Happen”…

Financial independence for youth was a hot button subject, since it permeates the solvency of all other change-making issues! If you can’t ‘fund yourself’ you certainly can’t fund the change you wish to see in the world…

One commenter, Jaric, said,

• “Many students that are struggling to pay off their school loans and are missing payments can refinance (take out a loan with lower interest) and actually negotiate with the creditor to reduce the total amount owed by as much as half.
  
• Business math is important, because paying off interest eats a lot of the earnings of the middle and lower classes. In fact, a lot of unscrupulous lenders go after the poorest of the poor offering them credit and the result is that they can only make minimum monthly payments but over the lifetime of the debt they pay it off 10+ times over.
  
• In my opinion, this is legal slavery and it seriously disgusts me. No person should be a slave. Also, when paying on a loan from a credit card, car or whatever if a person pays extra they should say they want to pay towards the principle (the amount of the original) because the creditors will usually pay towards the interest first.”

Linda, a 25-year veteran of the financial industry, added,

“Sadly we are seeing people who can not create a basic budget, make change, comparison shop or even create financial goals and learn to save for those goals.

Now is the perfect time – meaning right now — as the legislature is crafting language for the financial bail out plan — wouldn’t it make sense that instead of bailing everyone out all the time — that we actually teach them how to be financially independent.

How many times do you throw out the life preserver before you figure out that the person needs to learn to swim. You can’t drain the ocean!”

And just to put this in perspective on a middle-school youth level?

I asked my 13-year old what they shared in current events today on this topic, and she said,

“One really smart guy put his hand up, and told us all about the economy tanking and the McCain/Obama debate being postponed…but no one else read the paper or even knew what he was talking about, really.”

Including her, I might add.

Despite reiterating headline news and asking her opinions on various issues each morning…She’s usually got her nose in the newspaper…(COMICS section), with wet hair from a too-late getting up shower frenzy, shoveling yogurt in her mouth with her shoes for volleyball practice flung over her shoulder, (in other words, an ordinary teen)…

As she dashes to the car in her stocking feet she manages to deflect my question with a snappy bark,

“omg, not NOW, mom…can’t you see I’m running late?”

“And why is that?” I ask, hoping to prompt some reflection for self-discipline in annoying mama style…Responsibility? Accountability? Revised time-allocations perhaps? Nah…she answered:

“It just—just—got out of control…it’s not MY fault! You always blame ME!” she huffed impatiently and slammed the car door.

Hmnn…kinda sounds like the excuse for the national debt.

Shudder.

Visual Credits: Roulette wheel courtesy of media gallery/Northern Kentucky Convention and Visitors Bureau, Life skills visual via SKCBSA.org career education

Interactive Games/Virtual Worlds/Financial Activities for Kids

Shaping Youth: Virtual Chore Chart Boosts Kids Financially Savvy

My Reward Board ages 5-12; interactive customizable chore & finance tracking tool

JumpStart.org: National Financial Coalition; Reality Check for Kids

Global Stock Market: Free, realistic game simulation

Moneyopolis: Online game; probono effort by Ernst & Young for middle schoolers

LifeSmarts.org: National Consumers League/high schoolers

Independent Means website & products by Joline Godfrey, including Raising Financially Fit Kids, No More Frogs to Kiss: 9 Ways to Give Economic Power to Girls etc.

New Moon Money: Book written by girls for girls, from New Moon Publishing

Save for America: School savings curriculum w/online integration

Moon Jar: Award-winning financial literacy toolkit, book, products

Hot Company: “The money game with attitude”

Prosperity4Kids: Financial training products, programs & tools with resource links

Kids.Gov: Official Kids Portal for the U.S. Government on all things ‘money’

Sense & Dollars Online game; middle/high schoolers

Minyanland: Bulls/Bears and virtual critters teach money tips (w/NCEE)

iThryv: Newly launched online banking site for kids by Shryk.com

Related Resources for Kids’ Financial Literacy

Powell Center for Economic Literacy (An economic Romeo & Juliet)

When Tough Times Weigh on the Kids (WSJ Online 9-24-08)

How to Discuss Financial Woes With Children (CreditCards.com/USA Today)

How Young is Too Young for Credit Cards (note source: Credit Cards.com)

Kiplinger’s Money Smart Kids (article compilation)

Financial Literacy for Kids: Money Lessons Should Start Young (Parenthood)

Girls Inc: Economic Literacy (for adults too!)

Creative Wealth International (formerly The Money Camp)

Financial Smarts for Students: The JumpStart Coalition