Ask Dr. Barb: Helping students avoid high credit-card debt

mastersenaiper/pixabayDear Dr. Barb,

I was recently laughing with a group of friends about how creative we got with ramen noodles for low-cost college meals. Then someone noted that we  didn’t have credit cards back then, and the conversation shifted to the amount of credit card debt our offspring had accumulated, mostly from fast food and delivery service. It even happened with my son, who has been coached on money matters and credit card traps since early adolescence. I think it’s criminal to issue credit cards to college kids who are minimally employed or not working. Some banks charge them almost 25 percent interest on balances! The banks know that parents who have the means will rescue their kids. Sometimes parents aren’t even aware their child has a credit card. I know young adults need to establish a good credit rating, but can one raise a child who is able to resist using credit for convenience foods and whatever they feel they might need to fit in?

Dear Reader,

It is important for parents to teach children about money starting from a young age. However, in some cases, there can be a disconnect between “do as I say” vs. “do as I do.” By the time kids reach adolescence, money management has been modeled for them by how their parents talk about and spend money. In some cases, parents may spend too often on things they don’t need.

Adolescents and those of college age typically feel pressure to fit in socially and, on impulse, the convenience of a credit card will make it easy to quickly buy things they think they want but do not really need.

Also, keep in mind that a young adult’s brain does not fully mature until somewhere in their mid-twenties. However, even children can learn to distinguish needs from wants and start to learn about budgeting and saving money. Needs are things your family must have in order to survive. Wants are things that are nice to have but your family can live without. As an example, it’s a priority to spend money first on necessities like housing, food, healthcare and transportation. After spending on necessities, money also should be saved for emergencies, and then finally used for pleasurable wants like special clothing, restaurants and leisure activities.

Younger children can be encouraged to set up long-term and short-term savings goals. A short-term goal might be buying a new hand ball, whereas a long-term one might be a Lego set. Find out prices and help children weigh priorities as they come up with ideas to reach their goals. A plan might involve selling homemade crafts or food, or doing extra chores like washing a car.

As children get older, parents can set up a family-safe mobile money app and use it to track savings and spending. A child can check the balance regularly and see how money goes in and out.

Saving money also can be taught by creative activities. For example, planning and preparing meals as a family can be fun. Shopping and cooking can be shared by all. Home cooking saves money and teaches important time-management skills. In the long run, a convenience takeout may occasionally come in handy, but knowing how to put together a package of ramen noodles with a can of tuna or marinara sauce can be just as quick, and a delicious challenge.

Regarding healthy money management, parents might consider their own psychological relationship with money. Was money scarce growing up due to divorce, unemployment or illness in the family? Would such memories cause you to overspend today on what was missing in your childhood? Or for those reasons, would you be too afraid to spend money in affordable ways that are reasonable and protective, such as for prescribed medications, educational activities for your children, or charitable donations? Do you buy things to impress others or to keep up appearances? Are there moments when buying things online or at a mall becomes therapeutic when you’re feeling down, anxious or bored?

If parents frequently indulge in casual purchases, such as trendy clothing they really don’t need, or too many takeout meals, how can they expect a college kid to resist the same temptations — especially when credit cards are so easily issued to them?

Spending money too freely or controlling it too rigidly will send the wrong message to children. When parents have a healthy psychological relationship with money, and kids hear them talk about money in balanced and productive ways, family relationships are usually healthier as well.

The value of money can be communicated in conversations about how money works and what money is used for in society as well as in family life. Family members can set up common and mutually agreed upon goals about saving and spending money in a responsible manner.

Hopefully, by the time youngsters go off to college, they will have developed sound values about how to manage money — even if they are using a credit card. Understanding the value of money is their best protection against credit card debt. It’s also another way of better understanding their own limitations, an important skill to have upon entering the world of adulthood.

Barbara L. Rosenberg, Ph.D, is a licensed psychologist whose Telehealth practice serves individuals of all ages, couples and families. She previously chaired educational and social programs for the Essex-Union County Association of Psychologists. Contact her through BarbaraRosenberg.com.

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