Credit Cards And Kids

Credit Cards and Kids

Credit card debt is a huge problem for many Americans. You especially hear about this problem starting in a person's young adult years. No one wants his or her children to fall into debt! Help prevent your kids from accumulating large credit card debt as teenagers or young adults by teaching them smart financial practices as children. By doing this, you are helping them prepare for a bright future.

While your child is young, you can begin teaching them financial responsibility with games like Monopoly and activities that involve playing with fake money. Girls may like to carry purses like their mommies and boys may enjoy purchasing cars (play ones of course) like their daddies. Encourage these games with your children, and when they are old enough, they can practice making change and counting coins.

As your child grows, step away from the world of make-believe and into the real world. Open a bank account for your child where he or she can deposit birthday or holiday money from relatives. Also, if your child whines for a toy when you are shopping, give him or her a price limit on what they can choose before you leave the house. This will encourage children to realize what things cost and to see where your money is going. They can also help you shop for groceries. Give your child a few options in the cereal isle and ask him or her to find the best price.

When your child is old enough, explain to him or her how a credit card works. Emphasize that payments must be made on time and in full in order to stay out of debt. Be a role model with your own credit card and keep yourself out of debt. If your child is responsible enough, let them have a credit card that they pay off themselves every month or pay partially while you pay the rest. This will get them used to the idea and help build credit.

However, a credit card in the hands of a teenager can be a dangerous thing. If you decide to go this option, closely monitor the activities of this credit card and require your child to get a job to help pay for it. If he or she is irresponsible, take the card away and make the child use cash. By helping your children learn about credit cards, money, and budgets at an early age, you can keep them out of debt when they grow up since they will have good financial habits from the start.