Within only a few years of leaving home, most teens and young adults deal with large financial decisions, including taking out student loans, signing up for a credit card, buying a car, taking out a mortgage, and more. If you’re like most Americans, you’re familiar with navigating the difficult world of financial stress and debt, and it’s important to instill your knowledge onto your teens and young adult children. Here are some crucial conversations to have about different types of debt:
- Credit cards. Your teen has probably already received credit card offers in the mail, which is why it’s so important to ensure they know how to build credit as well as how to manage debt. You don’t need to get into the details of your own debt, if you have it.
- Owning a car. If you currently have a car loan, talk to your teen about what the payments look like, including interest. If a car loan is not currently a factor in your financial situation, tell your teen about why you decided to pay up front in full, or what the process was of paying off the loan.
- Student loans. If your young adult plans to pursue a higher education degree, it’s important he or she knows about taking out a student loan. While these loans are usually necessary for higher education payments, they still add to overall debt and can be difficult to be discharged when filing bankruptcy.
- Mortgage. Is your young adult child planning on buying a house? Generally, a mortgage is unavoidable when purchasing property, but timing is key with this kind of debt. Talk to your kid about interest, private insurance, and the rise and fall of the housing market.