Teaching Your Teen About Credit
Approx. time: 30 seconds
When should you start teaching your children about using credit and borrowing money wisely? The Michigan Association of CPAs advises that the teen years are a great time to introduce children to the rules for managing debt.
It’s an important topic because young adults are swamped with advertisements for credit cards as soon as they enter college and many don’t know how to say “no.” In fact, undergraduates are carrying an average outstanding balance on their credit cards of $2,100.
One way to prepare them for this reality is by letting your child “test drive” a credit card. Do this by giving him or her a prepaid spending card that can be used to spend a limited amount. Next time you go clothes shopping, hand your teen one of these cards and let him or her make decisions about how to spend the preset amount. It’s a great way for your teen to learn how to budget money and become familiar with using a credit card. Another advantage to these cards is that there’s no interest on your purchases, since they are paid for in advance.
If you have further questions about your family’s finances, consult your local CPA for all the advice you need.
