Teaching Your Children About Credit

This article comes from our first guest columnist Angel Hill. She lives in Savannah GA and has maintained excellent finances her whole life, partly because her mother is an accountant!

In today’s world, there is the perception that credit cards are king. Businesses and even lives are being built around credit cards, and the satisfaction of having everything you want instantly. The downside to this is that you have to pay these credit cards off – and this is where most people get stuck. They spend and spend, then fight an uphill struggle trying to pay their platinum super max master-visas off. In order to uphold their style of living, they survive by paying their minimum balances from month to month, even using one card to pay off another, and this does nothing to alleviate your actual debt, and lowers your credit rating. Many of my fellow college classmates have found that because their parents have such poor credit, they can’t qualify for student loans. So what do these students do? They get themselves a credit card to pay for school.

My suggestion to all parents is to start educating your children about proper money management from a young age. The elementary school I attended had a program called Enterprise Station where students could learn about working, banking, and spending. We were all assigned jobs – for example, I was a DJ for the radio station. We received paychecks, which we then had to deposit in our bank accounts. Then, we could use our checks to purchase items from a variety of shops, which were also run by fellow students. Many schools offer similar programs, but if your child’s school does not you can start at home by opening a joint checking/debit account for your child, giving them chores, and an allowance – having their own debit account can get them started building good credit for their future expenses, like student loans. There are loads of different options and techniques. Be creative!

Parents, make it possible for your kids to afford college. Start today by educating them, and yourself, about maintaining good credit.  Remember, the best example for your kids is the one that you set.  What steps have you already taken to educate your children?  What methods have you found that work best, and what methods don’t work at all? Please share your thoughts with us by leaving a comment!

If you have valuable credit advice you’d like to share on The Beacon send an email to don@thecreditbeacon.com. We’d love to run your story, you will receive full credit for your work and a link to your own blog if you have one!