Financial Education – How Young is Too Young

One of the striking moments of my young career came when I helped a 21 year old college Junior file for Bankruptcy Protection.  She had nearly $20,000 worth of very aggressive credit card debt and was facing a garnishment of her checking and savings accounts, where her college grant money had just been deposited.  She’d signed up for credit cards her first week in school, and she paid the “amount due” every time she got a statement.  For three years, she paid and paid and paid, and her debt rose and rose and rose.  She got more credit cards, since her payment history was pretty good.  She got credit line increases.  Each increase was usually accompanied by a shopping trip.  Suddenly, the amount and number of payments was too much.  She stopped answering her phone, stopped paying that minimum payment.  She almost dropped out of school over this.  Fortunately for this early client of mine, her parents caught on to what was happening and dragged her into my office and we were able to salvage the situation, avoiding a garnishment.

In my first week of college I was asked to apply for nearly a half dozen credit cards.  I did apply to one, and that one alone almost got me into trouble.  Several in my cohort did get themselves into pretty serious trouble.  Fortunately for me, my parents had taken time to give me some basic knowledge about debt and using credit responsibly.  Unfortunately, school had done nothing at all to teach any kind of personal credit management.  Even being an undergraduate business major did not help.  It just wasn’t discussed much.  And that’s a problem.

I’m not an expert on educating children.  Heck, I still have trouble teaching my kid to go to bed on time, but I do know that more can and should be done to prepare our children for what they’ll find when they leave our home, and as credit card companies continue to market to 18 year olds (and younger) that means one of those things should be the proper use of credit cards.

I have found, however, that you can’t teach what you don’t know yourself, so I would encourage all of you reading this to educate yourself.  There is a great teacher out there, you can ask him all kinds of questions and he will point you in the direction to finding the answer.  I call him Professor Google.