Buzz
A recent survey indicates that more than 50% of Americans have accumulated debt to finance their children’s extracurricular endeavors, and that may not be the wisest choice.
According to data from CompareCards.com, 62% of parents in the U.S. have incurred debt to fund activities like soccer or ballet for their kids. Of those, 9% owe over $5,000, and almost a third are in debt for more than $3,000.
Here’s an intriguing finding: the survey suggests that most parents, regardless of whether they go into debt, believe that supporting their children’s extracurricular activities will help them secure a profitable future.
The higher the investment, the stronger the belief that it will pay off – 90% of parents who spend over $4,000 annually believe their child will eventually profit from it, compared to 75% of those who spend less than $1,000.
94% of parents currently managing debt for their child’s extracurricular activities believe it will lead to future financial gain.
In other words, parents aren’t simply enrolling their kids in team sports or sending them to dance camp to foster social skills, team spirit, or fitness—they are hoping these activities will pay off financially.
At times, such activities do indeed help children earn money down the line. Many students land college scholarships thanks to their prowess in sports like lacrosse or basketball, or musical skills like violin playing; my own 16 years of piano lessons opened the door to a side job as a choral accompanist.
However, not every parent who goes into debt for their child’s extracurriculars will see that type of financial return in the future.
As stated by CompareCards.com:
Although 81% of our respondents believe it’s possible, the reality is that most children won’t ever profit from their passion. Some might earn a bit on the side, like a musician picking up local gigs for extra cash or a former athlete refereeing recreational games for a few dollars. A few may even turn their passion into a career as a coach or teacher. A rare few may even become the next LeBron or Beyoncé. However, the truth is that most won’t achieve that, and while you never want to squash a child's dreams, it's your responsibility to ensure that their pursuit doesn’t derail your family’s financial goals, including long-term stability and retirement.
Have you taken on debt to support your child’s extracurricular activities? How much would you be willing to go into debt before telling your child they need to quit their travel team or return their rented instrument? Would your decision change if your child were exceptionally talented or highly driven?
These aren’t easy choices, but many parents will face them eventually. If you’re worried about shattering your child’s dreams by not allowing them to pursue a particular interest, remember: when they’re older, they can sign up for adult ballet or join after-hours softball leagues on their own, and everything will be fine.
