In this sixth lesson in the Smart Consumer Skills Guide for Brilliant Kids series we ask you to explore debt and how good you really are with debt. In the last lesson, we gave 5 questions to ask yourself when spending. Debt is extremely important to understand and master. It can help in providing you with a great lifestyle, or can end up being a chain around your leg. It can ruin the rest of your life if a healthy respect is not given to it – it is a double edged sword, which unfortunately most of us do not understand.Debt is something that you will come into contact with sooner or later – the truth is that you need debt to live today – it is a fact of life and you need to be able to deal with it. The world economy functions when money is moving around it. Stop or disrupt that flow and people’s lives are affected by changing prices, changing interest rates, changing availability of goods and services. Debt is used to help money flow around more freely and quickly. It is readily available to all.

Teaching kids about money at an early age is the smart thing to do. They will grow up already familiar with how money works and be smart with money. Usually they are far more interested in the real world – games, videos, toys, play…

The real challenge is to make your children so savvy with money that they actually end up saving money for you as parents. In the last article we talked about companies spending billions to make you buy from them, because this makes them a lot more money. You just need to be able to control this. In order to do that, there are some questions you need to be asking, and some rules that you need to live by – and teach your kids. We have created this Consumer skills guide as a set of lessons that summarizes what you need to know and teach your kids.

You will need to understand how money works – what is an asset, what is debt, and then to develop the skills and strategies to use this knowledge. It is surprising to find that many adults, let alone kids do not understand money – yet they spend their whole adult life running after it. Because they do not understand, they end up being a ‘slave’ to money – it runs their lives.

In the developed world, we live in a capitalist system or economy, where companies and businesses are run to make a profit, by providing a service or products to customers – us the consumers. That is their primary and main purpose. They may provide a great service or product along the way, but that this part of making money. A better product or service can attract more custom and generate higher profits. The capitalist system is the most powerful economic system known to man; it has generated massive wealth, security, comfort, employment, power and has afforded a high standard of living for us.

However, until you understand that a company’s job is to make money by persuading you to buy – you will make the wrong decisions. You are the only person who is really bothered about you and your family. If you don’t learn this lesson, the companies will be left with smiles on their faces… while you’ll be left with a future of cold baked beans at mealtimes because it could be all you can afford.

In the next lesson we will talk about how to use this to your advantage.

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