Instilling Accountability in Kids with Credit Cards
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by: barrywaters
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Word Count: 487
Teaching your children about financial responsibility is one of the most important financial tasks you can take on. Given the current economic downturn, it is more critical than ever to instill your kids with the value of good spending habits. The most important step in providing solid values regarding money is to be a good model. If you have a routine of accumulating debt on your credit cards, your kids will learn from your behavior. If you instead pay off your balances each month, save for big purchases and regularly evaluate your financial goals, your children will model those behaviors.
In the interest of teaching your children responsible habits, do not shelter them from financial discussions in your household. Let them listen to you and your spouse or partner come up with a game plan to save for a vacation or a new car, for example. Let them participate in ways to help save or cut costs when your family needs to do so. 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. Set up a clear method of earning that allowance though helping with chores and other household duties. By working for an allowance, kids learn the concepts of spending, earning and saving. Many parents help their kids start a bank account, so they can help them learn how to set their own financial goals and save. By beginning to teach your children about money and budgets once they are old enough to count, you lay the foundation for financial responsibility.
By far, teaching older kids about responsible behaviors with credit cards is the most daunting of all financial lessons. 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 when your kids head to college, they will be inundated with ads for credit cards catering to students. Teach your children about credit cards early, so they can responsibly face the temptations of those offers and will understand how to manage their finances. Some parents introduce the concept of credit cards to their children by starting with a debit card. 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. The purchases made on those credit cards must be paid in full each month. 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.
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