When you begin at an early age to teach your kids the value of money and the importance of financial responsibility, you are fosting a healthy development that will help them in their future endeavors. It's more important than ever to teach your teen how to be credit card savvy in today's economy. Good credit means a lot and helping your child understand this at a young age will prepare them for when they go off on their own. Here are some tips on how to reveal the importance of financial responsibility and encourage good credit card habits.
Tip 1- Start talking to your teen about what it means to live in the constraints of their financial realities. Discuss the difference between needs and wants since many teens feel the need for instant gratification. Explain that it's more important to live within your means and earn what you spend, as that is the reality for most American families.
Tip 2- Part-Time jobs have been proven to increase a teen's financial literacy, so it's a good idea to encourage a job that will not interfere with education while still providing them with a means of earning money that is all their own. Even if they earn an allowance for you, they should need to perform tasks before they are given any payments. This will help them learn that they need to earn their money, and once they earn it, they typically think twice about what they will spend it on after they see how much work it takes to acquire.
Tip 3. Start them out with a prepaid credit card. Much like a credit card with training wheels, a prepaid credit card will allow a teen to get an understanding of how credit cards are used, and the financial concepts behind them without all of the risks involved with a real credit card. It will also help them learn to track their spending habits and give them valuable lessons on managing their money.
It's so important for the parents to be good role models for their teens. In light of today's current economic crisis, children have been witness to parents' poor spending habits, mortgages that the family can not afford, and a number of individuals with more debt than they can handle. The best thing a parent can do for their children is to set good financial habits for themselves too. In the end, your child will gain invaluable tips and habits from learning early on.