Children paying the price of our debts
It's not just you who suffers if you are in debt - your children may be victims too.
Two and a half million children are living in families dealing with debt problems, and a further 2.9 million families are struggling to keep up with their payments. These are the major findings from a report we’ve released alongside the Children’s Society.
Our new “Debt Trap” report shows that parents can become stuck in a toxic cycle of borrowing. This in turn leads to children becoming the unwitting victims of debt.
The research shows that there are far-reaching consequences for children when their parents are in problem debt, and more needs to be done to reduce the impact. This is the challenge for Government, regulators, creditors and the charity sector.
How does debt affect children?
When we looked into the impact of debt problems on children we found that children from families dealing with debt are much more likely to be having a rough time than families without debt.
Our research found that nine out of 10 parents in problem debt have cut back on essential items like food, clothing or heating for their children within the last year so they could keep up payments on debts.
Do kids really know what's going on with their family's finances?
Childhood should be an age of innocence but our research has revealed that kids probably know more about their household's financial situation than you might think. Half of the children we spoke to knew that money problems were a source of arguments in the family and 59% worry about their family’s financial situation.
Whether it's blazing rows in front of the kids or frosty silences over the breakfast table, it seems that children are aware of the impact money can have on relationships and it leads to them worry too.
We all want the best for our children but the pressure on household finances is making it hard for parents to look after their kids without falling into the debt trap, a vicious circle of needing credit for essentials which then makes it even harder to cope the next month when repayments kick in.
What can be done?
We think it's possible to minimise the impact of debt on children. It's not rocket science, we just need to see some common sense measures to be introduced that will safeguard children from the sharp edges of financial difficulty. Here are our recommendations:
- The Government should review whether the protection for children against the harm caused by debt collection – including evictions, bailiffs and court action – is fit for purpose and consider developing a ‘breathing space’ scheme to give struggling families an extended period of protection from additional charges, further interest and enforcement action.
- Local councils should create a debt collection strategy for Council Tax arrears which takes into account the impact on families with children
- Regulators should make sure that creditors have ‘early warning systems’ in place, so they know when their customers are facing financial difficulties and offer advice and support
- Earlier and wider access to debt support and advice should be introduced to help families put the brakes on a downward cycle of debt and reduce the impact on children
- There needs to be tighter restrictions on advertising to children, as well as piloting savings accounts for children through credit unions
Who's teaching our kids about money?
Being good with money isn't something that we're born with; it can take many years to get the skills you need to run the household finances. We asked children aged 10 to 17 if their school had taught them about money management and debt; only one in five had.
Of the same group more than half said they see adverts for loans often or all the time.
This suggests that today's children are learning about money from the adverts we see all around us, trying to tempt us into debt rather than a more practical and impartial approach from within the classrooms. If things carry on this way, it's easy to see future generations stumbling into a lifestyle of dependency on debt, unless something is done to improve money education.
What should you do if you’re a parent with debt problems?
If you’re finding it hard to manage the demands of raising a family and keeping on top of your finances then contact us for advice.
We can help you to build a realistic monthly budget and offer advice about the best ways to cope. You can get help by using our online Debt Remedy advice tool or calling us to speak to a debt advisor.
More on debt:
Millions relying on credit to survive
Huge jump in number of people struggling to pay Council Tax
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Comments
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There is one simple undeniable fact about debt and it is this. The transaction is zero sum, only the lender and borrower are involved, therefore only reason for the lender to lend is to end up with more money and therefore the borrower must end up with less money. It is an undeniable fact that borrowing money results in temporary loss of income and permanent loss of capital (i.e. one’s net worth is lowerered, permanently). So I decided to take that hit to buy a bigger house in which to bring up my children, but my finances took a 15 year beating. Borrower beware. Borrowing WILL seriously damage your wealth (whatever your station in life).
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"Erm Germany did the same" Not quite- in 1918 the Reich concluded a truce on the Eastern Front (enabling the USSR, alas). But I take your general point. The trouble is that we 'won' both world wars (does anybody?) and considered ourselves entitled to a nice cup of tea and a sitdown. Whereas Germany experienced a pseudo-defeat in Nov. 1918 which left them baffled and disgruntled, and a resounding one in May 1945 which left them with nowhere to go but up-- ditto Japan. The discipline and solidarity which were so painful for the rest of us in 1914 and 1939-40 were reharnessed by post-WW2 Germans to constructive purposes. The scourge of hyperinflation in the early 1920s gave them a preference for sound money which British politicians are not made to feel by their voters. The [I]Mittelstand[/I] was fostered by the occupying Allies which did not want another militaristic war machine based on big combines to arise. This deterred the FR of Germany from adopting the ghastly casino capitalism of Britain and the USA with its subservience to banksters and globalists. Historical lessons make for ironical outcomes.
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"The UK was the only country to fight its way all through two world wars, with the Great Depression as meat for the 1900-50 sandwich." Erm Germany did the same, and lost twice and suffered hyper inflation to boot. The attitude to work is totally different there, debt is not encouraged and trade unions see that businesses have to be successful if the benefits are to filter down to the workers. Even Angela Merkel comes from the old East Germany and the ethic is strong in her despite having lived and grown up in a communist society. Its obvious that if a family is in debt it will affect those in it including children. However, being even softer on debt is not the answer. As others have said saving up for things might mean getting them a bit later at first, but the avoidance of interest means that eventually those who avoid debt interest end up with more goods than those that don't. And if that means telling Little Johhny he can't have things because they are not affordable, we're at least laying the foundations of a better educated next generation.
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20 May 2014