by Kristin Kolehouse

Created on: June 13, 2009   Last Updated: June 14, 2009

Upon turning 18, children often feel empowered by the new opportunities with which they are presented. This newfound autonomy sometimes leads young adults to get in over their head as far as debt is concerned. Hopefully, their parents will have instilled in them a sense of financial responsibility which will detract from this inevitable need to borrow, but no matter how good a job parents do in making sure their children have a strong grasp on financial reality, mistakes are always made.

A parent's first instinct might be to scold their child, then bail them out. Unfortunately, this will do nothing to further teach them the importance of responsible borrowing. Parents may teach their kids monetary lessons throughout their childhood, but ultimately, real life situations are often the best learning tools for young and old alike. If a young adult bites off more than he can chew only to be saved by his parents, he isn't shown that there are consequences to every choice made in adult life.

Children often have their priorities sorely out of order. If a child has the choice of going to a fraternity party on a Friday night or paying his car payment, the more immediate excitement of time with friends will normally outweigh the long-term good maintaining a high credit score will provide. His parents should remind him that he is an adult now and tough decisions need to be made. It was his choice to take on a car payment and it is his number one responsibility. Sighing in protest and handing over $100 is what he expects, but will not teach him anything.

Of course, there are exceptions to this tough love approach. For example, if a college freshman gets her first credit card and finds she isn't able to make timely payments, her parents could help her while still teaching her important life lessons. They might pay her bill for one month in exchange for help with a project or household chore. If her school isn't near home, they could ask her to present them with a well thought out essay or speech as to how she will make timely payments in the future. She may say that it is a "drag" to make her do homework or chores in exchange for help, but she should be reminded her that creditors will never be so forgiving. This lesson may be enough for her to respect the importance of fiscal responsibility.

Whatever a parent decides do in the end, the most important thing is to make sure they take something away from the situation. Consider it an opportunity to continue their education.

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