Instilling Accountability in Kids with Credit Cards
Posted 04/06/09
One of the lessons parents find particularly challenging is educating their kids on ways to be responsible with money. In these difficult financial times, there is no time like the present to provide your children with a foundation of frugality and wise spending behaviors. The most important step in providing solid values regarding money is to be a good model. If you regularly purchase things you cannot afford and continue to carry large balances on your credit cards, those practices will be modeled by your children. Likewise, if you pay your bills on time and take time to work on your budget, your kids will be more likely to mirror those practices.In the interest of teaching your children responsible habits, do not shelter them from financial discussions in your household. For instance, allow them to observe you discuss an upcoming plan to purchase a new house and any budget talks that accompany that decision. Allow them to brainstorm with the family about ways you can save money to meet certain financial goals. With age appropriate explanations, help them understand how much things cost and where the money to pay for them comes from. Providing children with an allowance gives them a great financial foundation. Give them opportunities to earn their allowance through completion of tasks or chores, rather than just giving them money. Earning an allowance teaches children the value of money and encourages a stronger work ethic. Many parents help their kids start a bank account, so they can help them learn how to set their own financial goals and save. It is never too early to provide your kids with lessons about conscientious spending habits and the value of money.
Credit cards are one of the biggest challenges parents confront while trying to instill good fiscal behaviors in older children. It is wise to provide your kids with lessons about credit cards before they can obtain a credit card themselves. It is a sad fact, but many companies send children applications for credit cards near high school graduation time. And walk on any college campus and you will see the plethora of advertisements and free give aways for student credit cards. Providing your kids with a healthy respect for and responsible spending attitudes regarding credit cards will give them the confidence to manage the allure of spending more than they should. A debit card is a fantastic way to begin any hands on lesson about credit cards. Through the use of a debit card, your kids will understand the concept that you should only buy what you can afford. Others try to instill responsible spending habits by giving their older children credit cards that must be overseen by the parents. They stipulate that any balances have to be paid when the statement is due, lest the credit cards be taken away. If not handled responsibly, credit cards offer one of the easiest ways to accumulate debt. Teach your children about them early to protect their financial futures.