Bringing a child into the world comes with a ton of responsibility. Providing for them and keeping them away from trouble are obvious. Additionally, you also have the responsibility of teaching your kids about personal finance and how to manage money. Part of this is teaching them how to use credit & debit responsibly. Preparing your children to handle it early is important.
Teaching Your Kids To Use Credit & Debit Responsibly
The school system often lacks an emphasis on financial education and personal financial management. However, you are a living breathing example of everything for your child. Therefore taking on the responsibility of teaching your kids to use credit & debit responsibly is all a part of the job! The sooner you get your kids involved in financial management practices the better they will be prepared in their adult life to handle consumer debts.
Teaching your kids to use credit & debit responsibly many require tactics and efforts. Kids may not immediately understand the difference between a credit card and a debit card. They look the same, but of course the concept of a debit card versus a credit card is very different. This is something that should be explained to kids before they are old enough to get their own credit or debit cards.
As far as other financial topics, we have plenty of information for you! There is some great material that ACCC offers to help educate your kids.
ACCC Youth & Money Financial Literacy Resources
Core Concepts – First, use these Core Concepts to see what and how you should teach them. For example, the important thing to teach the younger kids is that money is an asset. It is something you need to earn and not something that just pops out of an ATM. You can help them set up a bank account for saving, and make them work for their money. Give them a chore chart and an allowance for successfully completing their jobs.
Teaching the Value of the Dollar – Next is helping your kids understand the value of a dollar. The best way to do this is for them to earn their own money. They can learn money management skills through practice! Some parents choose to do this through allowance, while other parents choose to have their children earn money outside of the home. You can also do a combination of both.
Whatever they end up earning, consider helping them divide it into threes – one part for saving, one part for spending, and one part for a charity of their choice. This shows kids the valuable skill of saving and the importance of charity.
Focus on the basics. Budgeting, needs vs wants, saving, and financial planning are some of the basics that you should work on from a younger age. Use practical examples to teach the basics of credit and debt to build a solid foundation.
For more information on how to teach your kids to use credit & debit responsibly, check out ACCC’s learning material here.