Inflation has risen at a disproportionate rate to earnings in the UK for a while now, creating an ever growing personal debt mountain. At the beginning of this year, it was estimated that Britain’s cumulative household liabilities had reached a brand new peak, with each home owing an average of £15,385 to credit card firms, banks and other lenders.
This hints at a growing and systematic issue in the UK, and one that is beginning to have a detrimental impact on the children who are exposed to it. Much of this stems from the added pressure placed on struggling families, with half of children in households that carry significant debts revealing that it causes regular arguments.
This is just one way in which household debt impacts on children, however, and there’s no doubt that financial issues can impact negatively on their short and long-term psychological wellbeing. We’ll look further into this below, whilst asking how parents can look to protect their offspring.
Debt is a Trigger for Anxiety and Stress
We often associate stress and anxiety with adulthood, but children are also prone to these psychological conditions.
In fact, an estimated 58% of British kids in families with problem debt say that they worry about their financial situation, and over time this can created prolonged feelings of anxiety and, in some instances, depression.
Often parents are oblivious to this, as they focus on trying to resolve their debt issues and fail to recognise the impact that this has on their kids.
It’s therefore important that parents try to manage their debt proactively and avoid exposing their children to the stresses that it causes, whilst also monitoring their behaviour to see whether they’re displaying signs of anxiety.
Cutting back on Essentials
Whilst it may sound obvious, it’s easy to forget that children who live in struggling households are likely to go without at different times in their lives.
In fact, an estimated nine out of every 10 families say that they have had to make significant cut backs at home, including essentials such as clothing, heating or, in some cases, food.
This can have an immeasurable impact on children, whether a lack of sustenance impacts on their concentration at school or old and worn clothes lead to them being bullied by their peers. A lack of money can also cause them to miss out on important social and educational experiences, leaving them isolated and struggling with their studies.
This is why families in debt must always strive to budget and make the most of their income, as they focus primarily on reducing long-term debt and ensuring that they minimise the impact on their children. They may also want to consider opening this type of managed bank account in instances where they have bad credit, as such as approach can help them to manage their bills and wealth more efficiently.
Early Exposure to Debt
Another key issue is that children often experience early exposure to debt, without being educated on money management and the difference between good and bad debt.
So, whilst more than half of kids aged between 10 and 17 have experienced debt within the family been exposed to advertisements that promote financial borrowing, just one in five have been taught core financial planning skills by a school or their parents.
This is a dangerous imbalance, and one that has a considerable short and long-term impact. The longer-term outlook is particularly worrying, as households may be inadvertently grooming an entire generation of future adults who are unable to manage their finances and minimise the influence of debt in their lives.
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