Things you Wish your Parents had taught you about Debt

Debt is a common and sometimes unavoidable part of life, but it can also have serious consequences for your financial future and well-being. Many young adults struggle with debt, either because they did not receive adequate financial education from their parents or because they made poor choices with their money. Here are some things we wish our parents told us about debt:

Debt is not a tool, but a trap.

Some people may think that debt is a useful tool to achieve their goals, such as buying a house, getting an education, or starting a business. However, debt is actually a trap that can keep you in bondage for years or even decades. Debt comes with interest, fees, and penalties that can make you pay much more than what you borrowed. Debt can also limit your choices and opportunities, as you have to dedicate a large portion of your income to repay your debt instead of saving, investing, or spending on other things.

Debt can affect your credit score and your future.

Your credit score is a number that reflects your creditworthiness, or how likely you are to repay your debt. Your credit score can affect your ability to get loans, mortgages, credit cards, or even jobs in the future. If you have too much debt or miss payments, your credit score can drop and make it harder for you to access credit or get better terms. A low credit score can also make you pay higher interest rates or fees, which can increase your debt burden even more.

Debt can cause stress and mental health problems.

Debt can also have a negative impact on your mental health, as it can cause stress, anxiety, depression, or even suicidal thoughts. According to a study from the Royal College of Psychiatrists, half of all adults with a debt problem also live with mental ill-health. Debt can cause emotional distress, reduce your quality of life, and impair your ability to function normally. Debt can also strain your relationships with your family, friends, or partner, as it can cause you to isolate yourself, argue more often, or hide the truth about your financial situation.

Debt can be avoided or reduced by following some simple rules.

The good news is that debt can be avoided or reduced by following some simple rules, such as:
• Live within your means. Spend less than you earn and avoid unnecessary expenses. Use cash, debit cards, or prepaid cards instead of credit cards to avoid overspending and paying interest.
• Save for emergencies and goals. Build an emergency fund that can cover three to six months of living expenses in case of unexpected events, such as losing your job, getting sick, or repairing your car. Save for your short-term and long-term goals, such as buying a car, taking a trip, or retiring comfortably.
• Pay off high-interest debt first. If you have multiple debts, prioritize paying off the ones with the highest interest rates first, such as credit cards or payday loans. This will save you money on interest and reduce your debt faster.
• Seek professional help if needed. If you are struggling with debt and its impact on your well-being, seek professional help from a free and confidential debt advice service that can help you assess your financial situation, negotiate with your creditors, and find the best solution for your debt. For example, in the UK, you can contact StepChange , National Debtline, or Citizens Advice for free debt advice.

Debt is not something to be taken lightly or ignored. It can have serious consequences for your financial future and well-being. However, by learning from our parents’ mistakes and following some simple rules, we can avoid or reduce debt and achieve financial freedom and peace of mind.