One of the biggest financial worries parents have regarding their teenagers is whether or not they will be able to manage their finances once they go out into "the real world". While certain provisions help limit the amount of damage teenagers and young adults can do with credit cards, it is still vital that you educate your children on proper use of credit and maintain a proactive involvement in their finances for as long as possible. The following tips outline how to teach your children responsibility when it comes to credit card usage.
Get On The Cards
Under new regulations passed in the United States, individuals under the age of 21 must have an adult co-signer for any potential credit line. Even if you live in another country that does not force these requirements, it is a good idea and will most likely be needed for any young adult to receive a credit card. You can keep track of expenditures and will have the same access to the account as your child, which helps you keep an eye on how they are spending.
Encourage Small Purchases
While we don't want to give the impression to our kids that spending excessively is okay, it is a good idea to teach your children that small expenditures are better than large ones. It's also vital to ensure that your children are paying the balance each month - in full - and to not allow excessive debt to pile up. Interest rates must be watched and the last thing anyone wants is loads of debt from small, easy to pay off purchases.
Your children may be adults, but they are still young and impressionable. Make sure your children understand the risks of co-signing with anyone for anything. If your child uses his or her recently established credit to help out another friend, he or she may be liable for the full debt if said individual defaults or cannot make their payments. One of the worst things in the world is to have one fiscally irresponsible person co-sign for another fiscally irresponsible person.