Teaching Kids About Good Credit
By Buff on Feb 18, 2009 in Finance
It wasn’t until my teenage daughter started working at her part time job that I realized how easy it is for kids to get credit these days. After about a month on the job she received a letter in the mail encouraging her to apply for a credit card. It made me kind of nervous so I decided to sit her down and find out how much she knew about credit and managing money.
Not surprisingly she knew very little. To her a credit card was like extra cash that she said she wouldn’t be overly concerned about paying back. She had friends who used their credit cards as a cash advance and if they had the money when the bill was due they usually paid it. If not, it was no biggie to them.
I explained to my daughter that having credit cards or personal loans was not free money. That it had to be paid back and on time or there would be repercussions. After our talk I told her if she really wanted to apply for the credit card, it would be okay. I’d help her make sure that she was using it wisely and only spending what she had to spend. She thought about it and decided to wait a year or two before dabbling with credit.
Brandon | Mar 15, 2009 | Reply
I don’t think you made the right call there. I think warning your children off of credit is a mistake; instead, while she’s still at home and her bills are nearly nil, teach her to use it responsibly, putting small amounts on and paying them off immediately. It builds good credit, and teaches a lesson.
tyler | Mar 15, 2009 | Reply
Are there “training cards” that you can get to teach your kids about money and proper uses of credit? I think it’s important for them to use it to fully understand, but I don’t want to get my family in trouble.
john | Mar 15, 2009 | Reply
How did your daughter’s friends HONESTLY think it was ok to not pay their bills? I think that is absolutely ridiculous and demonstrates not just a serious case of “stick your head in the sand” syndrome but also parental failures.
Catherine | Mar 15, 2009 | Reply
I think you’re doing the right thing as a parent to sit your child down and have an honest conversation with her about the realities of life. Late teens is a crucial age to start educating kids about financial responsibilities.
Ryan | Mar 15, 2009 | Reply
This is such a touchy issue; you want your child to establish good credit and good habits, but you don’t want them to get in over their head at any point. I think it’s a very fine line to toe, and you have to do what’s right for you.