o Generating enough income to cover your expenses and build savings.
o Maintaining emergency funds to manage unexpected financial needs.
o Keeping your debt-to-income ratio low.
o Investing in stable assets and focusing on long-term financial growth.
For generations, owning a home was one of the best ways to build a strong financial future. Now, that dream feels out of reach for many people. House prices continue to climb, and essentials like gas and groceries continue to be more expensive, while salaries and wages are not keeping pace. The result of this is that families feel the financial pressure, forcing them into more debt to survive.
The challenges get tougher each day, with rising mortgage rates, job insecurity, and rapid changes in technology all adding to the uncertainty. The stress of a family's financial worries is exacerbated by the ever-increasing global events that can escalate overnight, pressuring the financial stability of the world.
At present, household debt is at record levels. Parents and caregivers are striving to provide their children with the latest technology and consumer goods, which often necessitates increased borrowing. This can inadvertently teach children that borrowing is a normal part of life. Furthermore, assuming that stable employment will always provide sufficient income to cover growing debt overlooks the fact that job security has diminished.
Parents love their children, but if they grow up believing they can have instant gratification, they will continue the cycle of debt. To break this cycle, families need to make a communal budget where the family is involved in the want/needs process. Families can make a real difference by learning how to manage money wisely – spending thoughtfully, budgeting carefully and saving for the future. When we teach our children through the process of balancing the budget, the value of saving, budgeting and investing for the future, we provide them with the skills and the means to build lasting financial security. The next generation will grow up financially literate.
“Rising household debt comes with significant risks, such as financial crises, rising income inequality, and economic instability (Stockhammer, 2015; Wong et al., 2023). For instance, in the event of economic shocks, high household debt levels result in non-performing loans that weaken bank balance sheets and spread to other financial institutions through the contagion effect. This could result in an unstable financial sector that restricts lending to profitable investments and deserving households. Ultimately, household consumption and investment decrease, thereby lowering economic growth.”
Chikeya, C. K., & Ntsalaze, L. (2025). Determinants of Household Debt: A Systematic Review of the Literature. Economies, 13(3), 76. https://doi.org/10.3390/economies13030076
We should reconsider thinking that growing debt is acceptable due to stable jobs, as job security is becoming less common. Acting out of love, parents may unintentionally encourage their children to rely first on them and later on government support. When families lack knowledge about where they want to be in their lives and make poor spending choices, it can lead to a continuous cycle of debt and reliance on help from others. This ongoing accumulation of debt makes it difficult for families to achieve financial security.
To break this pattern, families should prioritise adopting smart financial habits and teach their children about saving, budgeting, and living within their means. This will help to provide a strong foundation for financial success. This way, future generations can achieve greater financial security and confidently overcome any financial challenges.
