Teaching Children About Credit
One of the ways some of us experience credit card debt problems has nothing to do with a lack of awareness of how credit cards can sneak up on us. The first time you max out your card and face the tough task of paying a credit card and getting yourself back on a solid financial footing, it can turn into a serious experience. And if you’ve been through this experience, punch school teaches you well that it’s easier to prevent credit card debt than it is to recover from it.
Perhaps the best thing about acquiring hard-earned knowledge is that you can pass it on to your children.
So how can you help your kids build a good relationship with credit and learn how to use it responsibly so they don’t have to learn about credit card debt and credit card abuse the hard way? Like everything else in life, they depend on you to teach them how to function as adults. So we have to take this shared responsibility together seriously.
First of all, teaching children to use credit effectively is not about preventing them from having credit. If there is, what happens is the opposite.
Credit cards are an essential tool for modern life just like cars and cell phones. We would even make a bold statement that sending a child out to fend for himself/herself without a credit card working in his pocket, a respectable credit rating has been established and training on how to use credit is nothing but irresponsible parenting. by adults. This is tantamount to sending your child into unarmed combat. Credit is very important and smart credit use is even more important.
You can help your children begin to understand the basics of getting good credit by giving them a credit card for high school/college.
You can pay the bills but it’s a good way for them to pay what they need and you can track their expenses against the monthly bills you get. But make sure that the credit card in your child’s name is somewhat while you pay it off each month, they build a good credit rating on what you do. Think of it as one of the many inheritances that you pass on to your children.
But don’t let your kids run wild with their credit cards. In fact, you can work with a credit card company to set a credit limit and not let it go up.
That way, you can set a limit on the amount of credit they have each month. And if they go through it and suddenly can’t eat lunch because they abused their credit, that afternoon starvation will teach them more than 2 days of lectures on fiscal responsibility.
Make sure your kids are aware that you paying their bills is a privilege & that they are very lucky to be able to start their adult life with a sponsor like this. Then give them 3 jobs that they have to complete to prove that they deserve this privilege.
(!) They must keep all receipts for every purchase they make. If they buy something & don’t get a receipt, they have to make one. (2) They must maintain an expense ledger. It is similar to a checkbook ledger but must be complete with every purchase they make and a running total and must be maintained on a daily basis.
If an expense appears that is not on the ledger, they will be asked to pay it back to you or risk losing their credit card. (3) They should seat you once a week to review credit card charges and explain item by item conflicting with each entry. This will do a lot to prevent them from using credit cards in a reckless manner.
This simple habit if done over a few months will teach your kids how to track, monitor and be aware of their credit spending & usage.
That way, when you cut the apron straps completely, they will not only have the appreciation they need to have a good adult life, they will also be wise in their use. And there’s no better gift you can give a child than that.