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Debt Doesn’t Always Hurt Kids

But avoid borrowing for purchases that aren’t forward-looking.

By Tom Jacobs


(Illustration: Raul Arias)

Is family debt always harmful to kids? A large-scale longitudinal study finds it depends in large part on the reason the money was borrowed.

The sociologists Lawrence Berger and Jason Houle analyzed data on 9,011 children between the ages of five and 14. They found unsecured family debt — such as credit card balances and unpaid medical bills — was “positively and significantly associated with child behavior problems.” However, the opposite was true of kids living in households with high levels of mortgage debt and student loans.

The researchers conclude in the journal Pediatrics that investing in your family’s future — say, by moving into a better neighborhood — can be good for your children’s emotional health. But when borrowing doesn’t involve forward-thinking purchases, suffering is more likely.

So giving in to your kid’s desire for an Xbox is not worth the trade-off if you take on more debt — and the stressed, distracted parenting that debt encourages — to buy it.