Episode 69: Starting Your Kids Off on the Right Financial Foot | Teaching Kids About the Dangers of Debt

Raise your hand if you love money!

But…raise your hand if you DON’T love figuring out what to DO with your money, spending too much money, or not having enough money?

That’s Brad Nelson’s mission as Debt Free Dad – to help normal everyday people take control of their finances so they can live a happier less stressful life.

We dig into a lot of practical and philosophical tips, including:

• First steps to get out of debt
• How to STAY out of the debt in the first place
• Letting go of limiting beliefs
• Creating a “debt is bad” mindset – for the wrong kind of debt
• Getting more time freedom in your life – because time is the one thing we never get back!
• We dig into how to teach kids and teens about finances too: “We have to teach our kids what debt is and the risk it can have on your life and the choices you make…”
• Why financial health is a daily commitment

Brad is one of our valued #LifeSkillsNow Season 4 camp leaders, teaching teens and tweens about the real cost of “convenience” and what compound interest can do for our high school kids. It’s phenomenal! My own kids and other teen testers were blown away.

Check out #LifeSkillsNow totally free right here.

Can’t see the video? Watch Talking to Kids About Debt here on YouTube!

No time for the video? Here are the notes!

Teaching Kids About Money

• 1:10: Today, I’m talking with Brad Nelson about teaching your kids about money, specifically the risks and dangers of debt. 
• 3:09: Brad spent most of his 20s living paycheck to paycheck and in debt. Finally, he said enough is enough and took control of his finances. He wanted to be a good example for his son and be able to teach him how to manage money.

• 8:19: In Brad’s work he sees many paths leading to crippling debt. Medical debt is the number one reason for bankruptcies and foreclosures in the US. Many Americans follow the consumerist society and live above their means. 

We are a consumer society, and we are a debt society. -Brad Nelson

• 9:50: Kids grow up thinking debt is normal and credit cards are normal. When you can’t afford something, you go into debt for it. People are asking, “Can I afford the monthly payment?” rather than “Can I afford this?”

• 12:05: 78% of people are living paycheck to paycheck! I’m shocked! Prices have gone up, and many people are in a pinch. This includes a wide range, from people who are overspending on lifestyle and are capable of living within their means with a little intentionality, and those who are genuinely struggling to make ends meet while they live very frugally. 
• 13:17: Many people just aren’t willing to make short-term sacrifices to get ahead. 
• 13:40: If you’re feeling hopeless about debt or living paycheck to paycheck, there’s always something else you can do to make progress. There are normal, everyday people out there seeing improvement in their finances. 
• 15:05: Mindset changes over time as you get out of debt. At first, you just need to be willing to be open to new ideas. Lay down your limiting beliefs and biases regarding finances.

Teaching Kids About Debt

•  16:48: Brad recommends that parents should teach their kids to avoid debt which is only a liability. Credit card debt on shipping for fun is only a liability. Leveraging debt in order to open a business when you have a solid business plan and are making money is not.
• 17:20: We need to help our kids understand what debt is, the risk that it can add to their lives, and that the choices you make as you become an adult play a role in the quality of life that you live.
• 17:57: One of the best things parents can do is model good money habits. Let your kids see you handling money. Let them know you’re putting money in the bank and you get that money out from the ATM: it isn’t a magic money machine.
• 19:19: I love how Brad defines different types of debt. “Lifestyle debt” is a revolving door of consistently spending without a payback plan. “Investment debt” is something like a house or business loan that has a payback plan and will gain value over time.
• 20:20: Prioritize working on your finances. Many people don’t have any idea what is happening in their bank accounts.
• 21:19: “What don’t you like about your life right now?” Write down the feelings, like I’m stressed, I’m worried, I’m constantly looking at the calendar and wondering when the paycheck’s coming, I don’t like the conversations that we’re having, or there’s no plan.
• 21:37: Then you can start figuring out what you can do to alleviate some of those problems. What actions do you need to take financially in order to live the life you want to live?

Practical Steps for Teens with Money

• 25:00: Let’s get into some practical steps we can take this week. If your teen is making money, help them set up a basic budget. Help them learn responsibility by giving them some expenses like buying some of their clothes, or food when they eat out with friends, have them pay their auto insurance, or phone bill. Teach them to save; they can even start investing. 
• 25:49: Investing early really pays off later in life. Brad describes a graphic he shares that shows that someone who invests less money but earlier in life can gain more from their investment than someone who invests more later in life.
• 29:20: Student loan debt is damaging for many people out there. Talk to your kids about college decisions from a financial lens. College isn’t always bad, but many young people make terrible college choices. 

Self-Discipline in Finances

• 31:46: Self-discipline is super important when it comes to finances. It’s also one of the hardest parts. It isn’t easy to get out of debt, and it isn’t easy to stay there. We’ll all make mistakes, and developing consistency and discipline is key to long-term success.  
• 33:28: Think about how much time you spend making money. You’re spending hours and hours away from your family, working to earn money. If you aren’t managing that well, isn’t that disrespecting yourself and your time? When you’re looking to make a purchase, consider how much you’ll have to work to pay for it. Is it worth trading the time for that item? Here’s the book Brad mentioned: Top Five Regrets of the Dying
• 37:07: The average new car payment is over $700 a month now. If you took that much a month and invested it, how much would that be worth in 10, 20, 30 years? Much more than the car at that time. 

• 40:00: Brad shares how he helps people work on their finances. People with regular accountability appointments are 95% more likely to complete a goal than those who do it on their own. 
• 42:37: We leave you with a quick action step you can take when you’re done listening. Being aware of what’s going on with your finances is a huge first step! Rocket Money can help you get rid of subscriptions.

When you start to understand where all your money’s going, you can begin to start your first budget. -Brad Nelson

Resources We Mention for Teaching Kids About Debt

• Check out #LifeSkillsNow totally free right here!
• The book Brad mentioned: Top Five Regrets of the Dying
• Rocket Money can help you get rid of subscriptions
• Check out Brad’s free video to help you reduce financial stress
• Find Brad online
• Follow him on social media: Facebook, TikTok, Instagram

Brad Nelson is the founder of Debt Free Dad. A devoted single father, Brad helps normal everyday people take control of their finances so they can live a happier, less stressful life through The Debt Free Dad Podcast and his online course, Roots of Personal Finance. Beyond finances, Brad values family, outdoor adventures, and creating lasting memories.