Millions of Americans are still struggling financially, but likely do not want to pass the kind of money problems and related stresses they feel onto their kids. One of the best ways to help youngsters avoid these problems in the future is by taking the time to instill good, basic advice about money while they’re young.
Even if consumers have had trouble sticking to what they know to be good credit practices in the past, it can still be extremely helpful to kids to learn the basics of smart account management at a relatively young age, according to a report from Tulsa, Oklahoma, television station KJRH. Taking the time to sit down with kids, whether it’s regularly or just once or twice, and explain the best ways to handle a credit card account when they’re grown up so that they don’t wind up with large amounts of high-interest debt can have a significant positive impact on their financial lives.
One of the most important things for kids to learn about credit card use is the importance of keeping their balance low, the report said. As a consequence, it might be a good idea for parents to teach them that it’s vital to keep spending so low that the balance on their card can be paid off in full every month. This is important because it won’t lead to interest charges that end up costing them more money, but will still grant them significant financial flexibility.
Further, parents should educate their kids on the importance of making sure all bills are paid on time and in full, the report said. While credit card users should always try to make more than the minimum payment on their account as a means of more quickly reducing their balance, sometimes it’s not always possible. However, this should never be the reason that cardholders miss a due date or don’t meet the minimum payment required, because this will likely lead to costly penalty fees and interest rates being applied to their balance.
Finally, it might be a good idea for parents to talk to their kids about the importance of shopping around for credit cards instead of taking the first one offered to them. This will help them identify the best possible accounts available to them and put them in a good position to borrow responsibly.