Q: I struggle with trying to stay out of debt, but it's difficult! How do I instill that ideal in my two young kids?
A: Bravo for you wanting to teach your kids about debt while they're young. When our boys started sixth grade, my husband and I began in earnest to debt-proof them.
Our plan provided that at the start of each month, the kids would receive a portion of our household income to manage. We called it their "family salary."
This was, in fact, the money we would have spent on them anyway. By giving it to them to manage, it moved from our control to theirs. We wanted them to learn early about having to suffer the consequences of the choices we make with our money.
The boys had rules to follow about giving and saving. They had "responsibility lists" that listed all the things we would no longer pay for: kid stuff, like video games, stickers, extra school activities, treats, and birthday party gifts for their friends. If they wanted anything on the list in the future, they'd have to pay for it themselves.
Another rule was that we would allow no salary advances and no loans of any kind. Period. Not even for five minutes if the boy forgot to bring his own money and needed a quick loan until we got home. We had a zero-tolerance policy for debt, even though we were still working our way out?something our children weren't aware of at the time. The principle: Don't spend money you don't have. It's a simple rule that, when instilled in a child's heart and mind, will be there for life.1