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The financial shock that occurred on the floors of the world’s stock exchanges this winter was attributed, largely, to one big factor: too much lending money without much consideration for the consequences. As a society, Australia is not so different from many other developed countries – it’s easy to borrow, and it’s easy to get in debt, too. It’s crucial that children learn the value of money – this much is obvious. Yet it’s also important that teenagers learn that even though they can run out and buy the things they might think they need, these things will catch up with them. This is an article on trying to avoid debt for teenagers! One of the easiest ways to accumulate large amounts of debt is through mobile phone use. It’s estimated that over three quarters of young people own a mobile phone, and many of these are on contracts, as opposed to the pay-as-you-go model. A 2004 report from La Trobe University criticised many mobile phone companies for aggressively marketing to teens (more information here), who can often rack up huge debts from chatting to friends or sending SMS messages to various competitions.
It’s also possible for teenagers to get their hands on credit cards. Many parents obviously shirk at the idea, but if they are prepared to ‘cosign’ an agreement, it’s possible for the teenager in question to have a card which their parents are then liable to pay off should huge debts appear which the minor has no way of paying back. There has been talk in the media of the way these cards are marketed, but essentially it’s up to the parents. The problem is there are more and more cases of teenagers turning eighteen only to find out the true cost of being heavily indebted. Being bankrupted at such a tender age is not an easy experience. If parents are there to bail the young adult out, then that’s not so bad (at least for the child!), but things change. Having poor credit is bad enough when you have the option of obtaining a reasonably well-paid job to slowly pull yourself out. Teenagers, on the other hand, need to know that low-end jobs with small pay cheques will not easily get them out of debts worth thousands of dollars.
A great place to start educating young people on the importance of credit (and the dangers of having bad credit!) is the website of a fellow teen, a nineteen year old American who breaks down the basic aspects of credit for teenagers in easy to understand manner. To visit this site click here