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It's never too early to teach children how to save their money so that they can understand the ramifications of taking out a student loan or car loan before they finish college. Teaching kids to be responsible and not buy on impulse can help set them up for a lifetime of financial security. One of the most important lessons you can teach your kids is to be responsible with a credit card loan. Bad debt management should not be in your children's future!
You can start with a child as young as three or four by giving them a piggy bank. Starting children learning the importance of saving can put them on the road to a lifelong habit that is one of the keys to financial success – keeping a contingency fund for financial emergencies. Many adults put those expenses on credit cards. Bad credit ends up being the result. Loans for people with bad credit are hard to obtain, and your child needs to know that bad credit can affect his ability to get a business loan, car loan or home loan.
When your child reaches school age, it's time to give them an allowance. Be sure to tie the allowance with some chores. Children learn the value of money by having to work for it. Working for something gets sidetracked when we buy everything on credit and can result in bad credit. Financing college education is something your child should understand, too.
Remember that you are your child's role model. If he sees you putting all your purchases on credit cards with bad credit, he thinks that's how the world pays for stuff. Kids need to know that eventually the price of merchandise charged to credit cards must be paid and if it is not that the consequences are a high risk loan, with sky-high interest rates.
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