Spend wisely or your child will be debt-ridden

I REFER to the letter “Spend wisely to avoid debt trap” ( The Star, Nov 2).

Parents must set good examples by spending prudently so that their children will emulate them. I have witnessed some parents spending so lavishly that their children adopted their ways when they grew up.

One of my friends who was very successful in his business in the 1980s liked to spend lavishly. Both he and his wife drove top-of-therange luxury cars.

He lost his wealth during the 1997 financial crisis. He suffered for several years but managed to recover and become rich again. After that bad experience, he realised the importance of having a prudent lifestyle and changed his spending habits.

But his only son spends lavishly and hardly has any savings, which worries him. He told me he regretted having set the bad example for his son.

According to statistics, 70% of bankrupts are in the 35-45 years age group.

People who have debts which are unmanageable should seek the advice of Bank Negara’s credit counselling and management agency to reschedule their debts to manageable levels before it is too late. Once a person is declared a bankrupt, it will cause a lot of difficulties and inconveniences to his or her life.

Many young people who overspend in their twenties and are caught in a debt trap will be made bankrupt in their thirties, which regretfully, is also the prime of their lives.

Many young people buy cars beyond their means and get caught in a debt trap. Cars are depreciating assets that will erode one’s savings.

Young people should buy cars within their means and use the savings to invest in appreciating assets like property and unit trusts which will increase their savings.