Introduction to Debt for Kids and Teens
This video explains the concept of debt in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about debt, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Elementary School
- Middle School
- High School
The topics covered are:
What is debt?
Debt is money that an individual, a company or a Government borrows from another party for a specific purpose or an unforeseen event.
They also make a promise to pay back that money to the lender over time; plus a little extra money, called interest.
What are the types of debt?
For individuals, the main types of debt are credit card debt, mortgages, student loans, car or auto loans, and personal loans.
Companies can borrow money by issuing secured or unsecured bonds of different durations and interest rates – or coupon payments – this is called corporate debt.
Similarly Governments can borrow money by issuing debt instruments like Treasury bills (T-Bills), Treasury Bonds (T-Bonds) and Treasury notes (T-notes). Since the government bonds are backed by the government’s promise, they are less risky and therefore pay less interest than corporate bonds.
Who can lend money?
Banks, credit unions and credit card companies can give loans to individuals.
Companies can get loans from banks or borrow from the general public by issuing bonds.
Governments can borrow from international banks like the World Bank or the International Monetary Fund, or raise money from individuals, corporations and other governments by issuing treasury instruments.
Why would anyone take on debt?
Debt is useful for meeting the shortfall between income and expenses. For individuals, it could range anywhere from credit card debt to big life changing debt like a mortgage or student loan.
For companies, debt might be a better way to raise money for large purchases than issuing additional shares and diluting their ownership.
Similarly, when government income is not enough to fund large projects, they can cover the difference by taking on debt.
Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens
Podcast: What is Debt
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything you need to know about debt: What is debt, What are the types of debt, Who can lend money, Why would anyone take on debt, and more.
Show notes and transcript at: https://www.easypeasyfinance.com/debt-for-kids-teens-beginners/