By Florian J. Haamann
The newest smartphone? No problem, there is a contract from one euro. A new 80-inch TV? Thanks to installment payments over 24 months, it can be financed without major restrictions. Or? The reality is of course not as beautiful as the advertising brochures suggest. Because installment financing and long-term contracts can quickly become a debt trap if you don’t calculate everything carefully in advance. Young people in particular are prone to this type of debt. According to data from the Federal Statistical Office, almost 600,000 people visited a debt counseling center in 2019 alone, almost a third of them were between 20 and 35 years old. In order to make young people in the district aware of the dangers of installment and loan financing, Silvia Ponath from the community foundation for the district offers the seminar “modeling clay, consumption, costs and credit” at schools. The advent calendar for good works of the Süddeutsche Zeitung would like to support the project financially, including material costs.
“For me, the project is close to my heart, because I think it is important to educate young people in good time, especially in this day and age, when there are installment purchases everywhere,” says Ponath. She sensitizes the pupils to the topic for a double hour at a time. At the beginning, the typical offers are considered and analyzed. “The students then have to calculate what the total costs are and I explain to them that they must also be able to reliably pay their installments for two or three years, even if a rent increase or something else comes up.”
—With cell phone contracts in particular, adolescents and young adults run the risk of losing track of the total costs.
(Photo: Imago Images / Sven Simon)
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The program also includes a psychological excursus. Together they look at Maslow’s hierarchy of needs. “The pupils should learn what the basic needs are and how they can finance them: rent, food, clothing. Then we slowly go up the pyramid and see what is nice to have, but not so important.”
Ponath is not surprised that the debt continues to rise. “In my parents’ generation it was frowned upon to take out a loan at all, because you still paid for your car in cash. Who still does that today? There were simply no installment purchases back then. Today, however, taking out loans is practically good form. ” She is not concerned with demonizing the credit, says the trained bank clerk, but with dealing with it sensibly.
In principle, she advocates a better education policy in this area. Years ago she had a conversation with a high school graduate who told her that although he can now speak perfectly in English, he does not know which insurance to take out and how a loan purchase works. “It was once considered to introduce a school subject, but it never happened. And when such topics are addressed in class, they are treated too theoretically. But I notice that it is important to pick up the students in their everyday lives “said Ponath. And there is great interest in her workshops among the students. “I’ve already seen teachers come up to me afterwards and say that they were surprised at how well the young people did their job.”
It is also important for parents to teach their children how to handle money at an early age. That is why she recommends paying children a fixed amount of pocket money rather than negotiating it individually whenever they want something. “Pocket money is basically the equivalent of income. That is why it is a bad example to distribute money on demand.” From the fifth grade onwards, she recommends transferring the pocket money to an account, just like the wages. “You don’t go to the boss every month and ask when I’ll get my money and how much.” It is then important to stick to it and not constantly deviate from it. “Of course you can make an exception, I wouldn’t be so tough. But that could then be linked to a job like emptying the dishwasher. It is important to teach the children as early as possible that you can no longer That means that young people are better equipped when they come to an age when they run the risk of getting into debt through installments and loans.
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