The following is an excerpt from ValueWalk’s interview with Howard Dvorkin, the Chairman of Debt.com and the author of ‘Credit Hell‘ and ‘Power Up‘. In this interview, Howard discusses the harms of using a credit card and urges parents to teach their children about the use of credit cards. Head over to ValueWalkPremium.com to listen to the full interview.
Dvorkin On Inheriting Wealth And The Use Of Credit Cards
Well, they gotta be taught. They have to be taught and parents are going to give their children a tremendous amount of assets. And if they are not taught to properly utilise those assets, they're going to lose them. I mean, to be frank with you, it's similar to giving your kid a credit card without ever teaching the child about the use of credit cards. They're gonna charge them up. What do you mean I have to pay for them? And what do you mean I have to pay them on time? What do you mean that if
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I don't pay him I'm gonna get hit with an interest charge. All that is very challenging, but children need to be taught at a you young age by the way, and I can only say this because I have a couple kids and I have drilled into their heads the use of credit cards and actually investing. And I opened both of them investment accounts to try to get them interested a young age and one really took to it and the other one, not so much, or mine doesn't work like that. Both are very bright kids, but they're just not focused yet. One of them is not focused.
Personal finance tips
The other one is extremely focused and trading stocks while he's away at college, and it's kind of interesting. You know, he gets he gets mad when he loses $20 in the stock market when the stock goes down. So it really bums them out. So I guess that's a good thing. But I will tell you that you know, you got to teach these kids The proper things and especially when they're young, teach them the value of $1, teach them the value of savings, teach them that, you know, you have to earn something, you have to work towards something.
Yeah,I one of my family's hobbies is involved in the equestrian business and, and we see a lot of very wealthy people that don't take the time to teach their kids values and it's a shame because sometimes they come out the other when the kids become adults, they can't focus and they can't function. And you see, you know, in very many affluent communities. The story is time and time again the kid got everything handed to him and now they can't compete because they've never had to struggle.
So I'm a big fan of throwing the kids into the fire and making them work toward something go to school, obviously and cut them off once they graduate college, they're done. You know, it doesn't make much sense to keep paying bills, let them struggle with them understand what it's like to be an adult.
On How This Impacts The Financial Planning Industry
Well, I do believe that this is a good opportunity, but you know, you're dealing with the second generation of wealth and you're going to be the financial planners or the advisors are going to have to spend more time trying to educate people to properly invest. You know, and I think that over time this will happen, is already happening. I mean, there's plenty of websites out there. Most of the big wire houses have a tremendous amount of information. The problem is force feeding it to the new wealth recipients, because a lot of them may not have the same ideals that their parents had.