How to Talk to Your Kids about Credit Cards |
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by: Janna Weiss
Wouldn't it be wonderful if personal finance courses were a mandatory part of our children’s education? Then we could send them off to college knowing that they wouldn’t be sitting ducks for predatory lenders. As it is, your kids won’t learn much about credit cards or debt unless you teach them yourself. Here are some suggestions for getting your child to take an interest in credit card education.
Use Real Life Examples
The credit card process is mysterious to kids. Most children don’t realize that when you charge a purchase, you have to pay for it later – and then some. The next time you pay your credit card bill, sit down with your child and show them the charges, fees, and interest you have to pay. Show them how the price of the purchase increases when you don’t pay your balance in full every month.
Get Them Involved
Kids enjoy role reversal. Ask them what they would do to raise enough money to pay off the credit cards completely. They’ll probably have some creative suggestions. Also, you might be surprised by the sacrifices they’re willing to make in order to reduce the family’s debt, such as giving up fast food or full-price movie admissions. Let their enthusiasm inspire you.
Play Games with Them
Robert Kiyosaki, author of "Rich Kid Smart Kid", has produced a game called “CASHFLOW for Kids”. It makes children consider the consequences of paying cash versus paying with credit, and allows them to decide which is the best choice. CASHFLOW is available for free to schools, and parents can purchase a CD ROM or board game version to play at home. Or, if you’re the creative type, you could come up with a game of your own.
To best teach your kids about credit cards, start young. Empower them to make wise decisions and teach them to be responsible spenders. I can’t help but wonder where the economy would be right now if debt education had been mandatory for my generation.
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