The current economic climate has caused many families to reevaluate their financial situation. With the holiday season approaching, parents are in the process of buying gifts for their children. Financial experts, however, are suggesting that instead of adding to many their already high credit card debt, American parents should start a savings plan for their children.

In the last financial quarter, the average amount of credit card debt per borrower rose to $4,996. This was a 4.9 percent increase over figures from last year. Credit card debt can lead to long term financial instability because substantial credit card debt can be difficult to come out from under.

This is why financial experts suggest giving children a savings account to begin teaching them about the value of money. These experts suggest that it is important to prepare the next generation and help them develop savings goals and responsible spending habits. Learning about consumer spending and the difficulty of getting out from under debt early can help children become financially responsible adults.

There are many plans available to parents that can help teach their children about money. Many are set up as college savings plans to help teach the child about the importance of investing in his or her education.

When an individual amasses substantial debt, sometimes the only option to get out from under it is bankruptcy. There are, generally speaking, two options available for individuals. Chapter 7 bankruptcy allows for debt to be discharged once a debtor surrenders his or her non-exempt property. (Often, a debtor will have no non-exempt property to surrender.) Chapter 13 bankruptcy allows a debtor to make one regular payment toward all of his or her debts for a period of up to five years.

Not all debt can be discharged in bankruptcy. The common types of debt that can be discharged include credit card debt, medical debt and mortgage debt if the individual does not want to keep his or house. Debt that cannot be discharged includes most student loan debt and child support.

Source: San Francisco Chronicle, "Savings plans that can make good Christmas gifts for kids," Lewis Humphries, Nov. 30, 2012