Parents: Teach Your Kids About Credit

Your parents may have talked to you about the birds and the bees, they may have even talked to you about smoking or drugs, but did your parents ever talk to you about your credit? Probably not, as most research suggests! Parents don’t talk to their children about money and managing their credit because of several reasons. The biggest reason being that the parents themselves don’t understand how to manage their credit wisely and they don’t feel like they can “practice what they preach”. But hypocritical feelings aside, parents need to discuss the importance of credit and money with their chidren!

It should start as early as 7 years of age. Parents should begin by encouraging their child to save money in a piggy bank and putting a high value on the money. Or even open a savings account with the child, add to it frequently and let the child watch their own bank book grow! They will feel a sense of pride as they become “rich”! Then as the child begins pubescence, parents need to discuss safe spending with their children – it’s as important as a discussion on safe sex!

So how can parents bring up the topic when they might be in debt themselves? Children know when you can’t afford certain items, you may have even told them! Explain to them the difference between “want” and “need” and how credit cards are NOT free money. In school children are taught math, however they should also take a mandatory money management class. I was just reading an article that two in three college graduates will be in debt by the time they graduate from college – not exactly the ideal situation for entering the work force!

Some great lessons to teach your kids about money and credit are:

1. Have them ask themselves before purchasing “Do I need it?” – Most people see items at the store and they just HAVE TO HAVE them? However oftentimes having is not a great a thing as wanting! You have to stop and ask yourself if you really need it and what benefit will it really serve. You might find that you save yourself a lot of money by changing your mind and not “impulse buying”.

2. If it’s something over $100, think about it overnight – If you come across an item that is a few hundred dollars, walk away and give yourself the night to think about it. Chances are, you probably will come to your senses and realize it is just an unnecessary luxury. However if you can still justify the benefits of the item after 24 hours, then you probably need the item.

3. Can I buy it without using credit – Credit should only be used for emergencies! Not as a substitute for cash. People make the mistake of thinking that they can simply pay it later or they’ll just buy now and worry about it later. Believe me, later will come! You may even regret your purchases! If there is a luxury item that you really must treat yourself to, save up for it! You’ll find that it usually only takes a few months to gather the money for the item you wanted and you’ll be completely debt-free and have your item too!

Also make sure you educate your kids about the benefit of good credit and the hazards of bad credit. Without good credit, you can’t buy a house, buy a car, or get credit lines for other purchases and services. And it’s also important that they know to check their credit report at least once a year. The goverment recently passed a law that says that everyone is legally allowed to get a free copy of their credit report once a year from all 3 of the major reporting agencies. If you wish to view your credit report for free, visit their official site at:

Just remember your kids have to be taught about good credit and money management – no one was born knowing! If you currently find yourself in debt and don’t want to seem like a hypocrite, then show your kids your bills, break down the math for them and simply tell them you don’t want them to end up like you are. They will understand! Besides, the first time your children find themselves in financial trouble, who do you think they’re going to come to for assistance!

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