For many families, the topic of debt is swept quietly under the rug.
It’s personal, stressful, and often wrapped up in shame. But as debt becomes more common in everyday life, talking to children about it is one of the most valuable lessons you can pass on.
Done well, these conversations can help your children build financial confidence, understand the value of money, and avoid money-related anxiety as they grow up.
You don’t need to be a financial expert, and you certainly don’t need to share every detail.
What matters is being honest, age-appropriate, and open.
This guide will help you talk to your kids about debt in a way that makes sense to them and supports their long-term relationship with money.
Why talking about debt matters
Money is part of everyday life, yet many of us grow up without understanding how it works—especially when it comes to debt.
Children often learn about money through observation.
If they see you using a credit card or taking out a loan, but never hear it explained, they can make false assumptions:
- “Credit cards are free money.”
- “Debt is something to be ashamed of.”
- “You can’t talk about money—especially if it’s bad news.”
By talking openly, you demystify debt and give your children realistic tools to handle money.
The goal isn’t to burden them with your problems—it’s to build financial awareness and resilience.
Step 1: Start with the basics—what is debt?
Before getting into your personal situation, help your child understand what debt actually is.
Keep it simple and use relatable examples.
Explain that:
- Debt is when you borrow money and agree to pay it back later, usually with some extra (called interest)
- Debt isn’t always bad. People use debt to buy homes, study, or manage emergencies
- But it becomes a problem when you borrow more than you can afford to repay
If your child is under 10, you might say something like:
“When we use a credit card, we’re borrowing money to pay for something now and paying it back later—kind of like when you borrow a toy from a friend and give it back after playing with it.”
Older children and teens can understand more:
“Debt isn’t always a problem, but interest means you often pay back more than you borrowed. That’s why it’s important to only borrow when you have a plan to repay it.”
Making the concept clear helps them recognise debt as a tool—not a secret or a trap.
I add some commonsense age-appropriate options at the end of the post.
They are only suggestions. They are your kids so educate them your way.
Step 2: Be age-appropriate but honest about your situation
If you’re currently in debt or facing financial difficulties, it’s okay to acknowledge that.
Just do it in a way that matches your child’s age and emotional maturity.
Here’s how to keep it constructive:
- For younger kids (under 11): Keep it light. Reassure them you’re managing things and making good choices.
- For tweens and teens: You can be more detailed. Use this as a learning moment, not a stress trigger.
You might say:
“We’ve had to borrow money to help with some things, and we’re now paying it back bit by bit. It means we can’t afford everything right now, but we’re working on it.”
Or for older children:
“We’re managing some debts, and we’ve planned to pay them off over time. It means we’re focusing on the essentials for now.”
The key is to model calm and control, even if the situation is stressful.
Your tone matters as much as your words.
Step 3: Talk about different types of debt
It helps children understand that not all debt is the same. This lays the groundwork for making informed decisions as they grow.
Briefly explain that there are:
- Good debts: Borrowing to invest in your future, like a student loan or mortgage
- Bad debts: Borrowing to buy things you don’t need or can’t afford, especially if the interest is high
You could say:
“Some debt helps you get ahead—like borrowing for education or a home. But other debt, like borrowing for clothes or gadgets, can add up quickly and make life harder later.”
This opens the door to future conversations about things like student finance, credit cards, and buy-now-pay-later services.
Step 4: Use real-life examples (without oversharing)
Kids learn best through stories. Use everyday situations to teach without turning it into a lecture.
For example:
If you’re comparing prices before buying something: “We’re making sure we don’t overspend, especially since we’re paying off some bills.”
If you’re paying with cash or a debit card instead of a credit card: “We’re using money we already have instead of borrowing. That way we don’t pay interest later.”
If you cancel a holiday or scale back spending: “We’re choosing not to spend on this right now because we’re focusing on repaying what we owe.”
You don’t need to go into every detail. Focus on what’s useful, not stressful.
Step 5: Encourage questions and normalise financial conversations
Make it clear that talking about money is okay in your home even if it’s not always easy.
Invite your children to ask questions and share their thoughts.
You could say:
“If you ever want to ask about money—whether it’s saving, spending, or borrowing—you can always ask. There’s no such thing as a silly question.”
If you don’t know the answer, look it up together.
That shows them that learning about money is ongoing and that it’s okay not to have all the answers.
Step 6: Teach healthy money habits alongside the conversation
To make the topic stick, back it up with simple actions your children can try for themselves.
Here are a few habits to encourage:
- Saving a little regularly: Even if it’s 50p a week, the habit matters more than the amount
- Spending mindfully: Talk about needs vs wants before buying something
- Understanding where money comes from: Link money to effort—like doing chores or helping out around the house
- Earning before borrowing: Encourage patience and planning before using borrowed money
These small habits build financial confidence that lasts into adulthood.
Step 7: Be mindful of stress and guilt
Talking about debt shouldn’t make children feel responsible or worried. If you’re feeling anxious, try to process that separately before having the conversation.
Children pick up on your mood.
Avoid saying:
- “We’re broke because of you.”
- “You wouldn’t understand.”
- “We might lose everything.”
Instead, focus on what’s in your control and what you’re doing about it.
If you’re struggling emotionally or financially, speak to someone.
You can get free advice from:
- StepChange
- Citizens Advice
- National Debtline
- Mind if debt is affecting your mental health
Supporting yourself means you’re better able to support your children too.
Honesty, not heaviness
Talking to your kids about debt isn’t about laying out every unpaid bill or overexplaining your choices.
It’s about creating an environment where money isn’t a mystery and where mistakes and recovery are part of the learning process.
To recap, here’s what works:
- Explain debt simply and clearly
- Be age-appropriate but honest
- Use everyday situations to teach
- Invite questions and keep the door open
- Support learning with practical habits
- Focus on calm, not crisis
Children who learn about debt from a place of openness and understanding are better equipped to handle it themselves in the future.
That’s a legacy worth passing on.
Talking to your kids about debt: Age-by-age guide
This guide is flexible—every child is different. Use it as a starting point and adjust based on your child’s personality, curiosity, and emotional maturity.
Ages 4–6: Introducing money and simple choices
What they understand
At this age, children are just starting to grasp that money is used to buy things. They understand physical coins and notes more than digital transactions.
How to talk about debt
Keep it light and abstract. Don’t mention your own financial stress. Focus on the idea that money is earned and choices are involved.
Key messages:
- “Money doesn’t come out of nowhere. We must earn it first.”
- “Sometimes we save up to get something later.”
- “We don’t always buy something just because we want it.”
How to teach:
- Use play money to role play shopping
- Let them use coins to pay for small items
- Encourage saving in a jar or money box
These early lessons help create a foundation of patience, planning, and awareness.
Ages 7–9: Understanding saving, spending, and borrowing
What they understand
Children start to recognise the difference between needs and wants. They may notice you using cards or buying things online.
They also begin to understand basic cause and effect.
How to talk about debt
Gently introduce the concept of borrowing and paying back.
Explain that sometimes people borrow money for big things, and that it’s important to repay what you owe.
Key messages:
- “Debt means borrowing money and paying it back over time.”
- “It’s not free, you often pay more back than you borrowed.”
- “We try to only borrow when it’s really needed.”
How to teach:
- Read age-appropriate books about money (e.g. The Four Money Bears)
- Talk about saving up for something rather than buying it immediately
- Give pocket money and help them decide how to spend or save it
This is a great time to build healthy habits and avoid myths like “cards = free money.”
Ages 10–12: Starting to think critically about money
What they understand
Children at this age are capable of more complex thinking. They can understand percentages, interest, and consequences in basic terms.
How to talk about debt
You can start being more honest about the cost of living. Frame borrowing as a choice that needs to be managed carefully.
Key messages:
- “Some people use loans or credit cards, but they have to pay interest.”
- “Borrowing money for something important, like education, can make sense.”
- “If we don’t manage debt properly, it can cause stress.”
How to teach:
- Show how interest works with simple examples (e.g. “If you borrow £10 and have to pay back £12, that extra £2 is interest.”)
- Help them set goals and track savings
- Involve them in budgeting for small purchases or family outings
This stage lays the groundwork for financial independence in teenage years.
Ages 13–15: Connecting debt to real-life choices
What they understand
Teens start to connect money decisions to their own future. They may be thinking about part-time jobs, savings, or even university.
How to talk about debt
Be transparent but calm about your own experiences. Introduce the difference between “good” and “bad” debt and the importance of planning.
Key messages:
- “Not all debt is bad but you need a clear way to pay it back.”
- “People get into trouble when they borrow more than they can afford.”
- “You have power over your money choices, even when things feel tight.”
How to teach:
- Help them set up a bank account and learn to manage it
- Talk openly about buy-now-pay-later apps or store cards
- Explain the risks of payday loans or high-interest credit
These years are crucial for shaping attitudes that will carry into adulthood.
Ages 16–18: Preparing for financial independence
What they understand
Older teens are on the cusp of adulthood. They’re thinking about work, university, apprenticeships, or moving out.
They’re ready for practical, detailed financial knowledge.
How to talk about debt
Be open about credit cards, overdrafts, student loans, and how debt fits into the adult world.
Help them evaluate risk and consequences.
Key messages:
- “Your credit record affects your ability to borrow in the future.”
- “Student loans are structured differently from other debts.”
- “Avoid borrowing to impress others—it’s your future you’re paying for.”
How to teach:
- Use budgeting apps or spreadsheets to plan for income or future expenses
- Review basic contracts like mobile phone deals or subscriptions
- Talk about credit scores, interest rates, and how to build financial trust
By now, they should feel confident asking questions and making informed decisions.
Final tip: Keep the conversation going
Money isn’t a one-off talk—it’s a series of small conversations.
The goal is to create an environment where money isn’t taboo, and where asking questions is always welcome.
Whatever your child’s age, focus on:
- Honesty without oversharing: Be truthful, but don’t transfer your stress
- Learning through life: Use everyday situations as natural teaching moments
- Empowering language: Talk about choices, goals, and planning, not just limits or failures
The more confident your children feel about debt, the less likely they are to make fear-based or shame-driven decisions in the future.
