Make Sure Your Kids Are Conscientious About Credit
It’s never too soon to begin teaching your children how to be good money managers. Financial education begins at home and in order to give your kids a head start towards becoming financially responsible adults you should take every opportunity to teach them the importance of saving, not overspending and using credit cards wisely.
It all boils down to a budget.
The most important element of keeping a household on the right financial track is to establish a workable budget and stick to it. Involve your children in the budgeting process by sitting down with them and outlining their own budget based upon their allowance or income from babysitting or other part time jobs.
Open up a bank account in your child’s name if they do not already have one. A savings account can be started at most banks for as little as $25. Impress upon your child how important it is to put aside a portion of their paycheck (allowance, birthday money or other income source) for savings on a consistent basis. Teach them how to establish savings goals and incentivize them reaching certain benchmarks by rewarding them with an additional saving boost from you once they have saved up a specific amount.
If you have a teenage child, some banks offer checking accounts which are designed as a teaching tool for teensto learn good money management skills. All that is required to open one is that a parent co-sign. A checking account is a good way to get your child into the habit of accounting for all of their deposits and withdrawals throughout the month and then balancing their account. This will pave the way for them eventually opening their very own credit card account.
Show them how to shop smart.
Teach your children to avoid making impulsive purchases when shopping. With so many elements of the shopping experience geared towards enticing consumers to spend, such as ads, discounts and sales, it’s all too easy to be lured into buying unnecessary items. This is especially true if you have a credit card at your disposal. Teach your children that buying on credit is borrowing money that must be paid back, and that there are real consequences involved. Get into the habit – and pass it along to your children – of waiting 24 hours before making a big purchase. This gives enough time to really think about whether or not the item is truly wanted, needed or useful. In order to learn how to save, children first must learn how to wait. The seeming instant gratification that a credit card can provide must be addressed and debunked.
If you teach your children how to handle money and credit in a responsible, thoughtful manner, you are giving them a precious skill set that will aid them well into their adulthood.
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