How Debt Affects Children In The Family

How Debt Affects Children In The FamilyAs adults come to terms with the fact that financial problems are part of everyday life, they might overlook the fact that debt affects children too. The focus has mostly been how parents or adults need to put their finances in order to give them a better chance of success in life. In the process, not a lot of attention has been given with how children also absorb the impact of debt in the lives of their family.

There are a number of debt payment tips for married couples to get them off to a good start. However, it needs to consider how children will be affected in the future by the decisions they make at present. Apart from being too focused on the interest payment and their repayment schedule, the types of loan they get can have an interesting effect on their future children.

CNBC shared recently that consumers have now breached the $1 trillion mark when it comes to their credit card debt. That is reminiscent of the averages around the 2008 financial crisis. There are some people who are quick to point out that this is actually a good thing for the economy. It shows that people are starting to feel more confident with their spending levels.

However, what is troubling with this is the nature of the debt. Credit cards are unsecured debts meaning it has relatively higher interest compared to secured debts. For people operating in the red, one hiccup and they can get caught in a tailspin of debt. It can be a challenge to pull out of vicious cycle of debt.

One very interesting data on how debt affects children in the household is shared by Dartmouth. The study, a first of its kind, focused on how the debt of parents affected the socioemotional well-being of the children. It found out that when the type of debt parents are carrying focused on mortgage loans and student loans, children tend to have less behavioral problems. Conversely so, the higher credit card debts are as well as other unsecured debts, the higher the chances of children exhibiting behavioral problems.

To better understand how debt affects children, here are some specific examples on how financial mismanagement can ripple out to your kids.

Feeling a sense of failure

One of the ways by which debt affects children is having a sense of shame and failure. On their own, your children are already bearing a heavy burden of trying to find their own identity. The last thing they need is to have debt problems in the family getting in the way of their own self-discovery.

There can also be times when they feel powerless to help their parents in their financial troubles. It could weaken their resolve in life and make them reclusive. This could hinder their self-esteem making them emotionally weak and vulnerable. These factors can inevitably hurt the personal development of the child.

Bad financial role model

As adults try to absorb the blows of financial troubles, debt affects children by being exposed to unfit financial role models. A recent article in Business Insider stresses the fact that parents are the most prominent financial example children have in their lives. As a result of this, whatever the adults are going through are perceived by children as normal and acceptable.

If you are trying to juggle multiple maxed out credit cards, your children would think that this is normal and something they can do when they grow up. It does not only apply to huge debts. If you are able to get by but running up on debt with frivolous expenses then your children might do the same as well. That would pose a serious problem when they start managing their own money.

Lack of quality education

One of the possibilities when adults are straddled with too much debt is their inability to provide good and quality education. For the parents, this is simply a means to an end where their limited funds mean they have to stick to the bare necessities of the family. However, the effect of this decision could be felt by the children even in their adult life.

The opportunity to avail of quality education could pass them by. In effect, the children could have a harder time getting into higher education. This could decrease their chances of landing a great job and could affect their earnings over time. One more thing it can do is that your children could miss out on personal finance lessons in school. This would then put them at a disadvantage when it comes to dealing with debt.

Deteriorating physical health

One of the more troubling areas by which debt affects children is in their personal health. One possible reason for this is because of lack of funds. Parents are unable to provide a safe living environment for the children. In effect, this exposed them to various types of sickness and environmental factors that can adversely affect their health.

There are also instances that debt affects children’s health with an apparent lack of proper nutrition. As the adults in the family deal with debt, they may not be in a position to provide adequate food sources to their children. Especially when you start to consider their nutritional needs. As long as they have food, it wouldn’t matter what type it is.  

Debt affects children through mental health issues

Debt can trigger a lot of stress into anyone’s life. It is not easy to constantly have to worry about meeting your payments every month. Not to mention making sure you do not miss a due date. Missing a payment will not only affect their credit score. It will also contribute to a bigger amount due on succeeding statements.

As this happens, stress can trickle down to your family especially the younger ones. This can affect them in ways you cannot imagine. Debt can isolate them socially and make them deal with age-inappropriate problems they are not equipped to handle. With all these, Time explains that financial stress exacerbates issues which can lead to mental health problems.

Relationship problems

One of the more obvious ways with how debt affects children is when it starts to affect relationships. It can pose problems with the parent-children relationship to be specific. This can be a lot more serious when each party is unable to see past their own problems. It would be hard for them to understand what the other is going through. This can be understandable with children up to a certain age but adults need to know better.

It is challenging to face debt all while trying to figure out the best way to provide for a family. However, failing to preserve your relationship with your children and letting all your frustrations out on them could do you more damage. It might be hard to accept the fact that you need financial help but at the very least, you need to contain some parts of your financial troubles within yourself.

Try to compartmentalize and do your best to shield your children from negative emotions debt brings. One way to do that is to try and calm down before you start interacting with the children. Another is to keep yourself grounded and remember that you are doing everything you can specifically for your family. This can help you manage your financial troubles all while maintaining a good relationship with the children.

Debt affects children differently and it is important to be on top of the situation. As you try and manage your financial troubles, it is crucial to keep in mind how your actions are affecting the children.