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Part of growing up usually includes learning the cold, harsh reality of life and credit card debt. Either most teenagers by the time they are eighteen years of age already have experience with credit cards or they are just starting to receive credit card offers in the mail. It is an exciting thought to entertain and most teens jump at the first opportunity to possess a credit card. Teaching kids about money, including saving, good spending habits, credit cards, debt, and even credit card fraud prevention is the responsibility of the parent--and it may be a more difficult lesson for kids to learn than it first appears. Establishing Credit More frequently than not you will find that parents are getting their teen kid a credit card. Rather than allowing them to spend frivolously and drive themselves quickly into debt, parents want to assist their children on hopes of teaching them about good and bad credit. There is no better way to learn than to live through the experience first-hand. It is pertinent to teach your teens about healthy spending and saving habits, as well as, how and why to avoid their naturally impulsive behaviors. Nothing is Free Although credit card offers come in the mail, and will continue to do so, especially after setting up a credit card account, it cannot be stressed enough to let your teens know that nothing is free. Offers are free--“you are pre-approved” sounds wonderful to everyone--but it always comes with an attachment. Teens tend to forget that a quick swipe of a card may get them out of the store quickly with a new item purchase but it stills needs to be paid for--with interest and within a set time frame. What to Avoid Honesty is the best practice in all scenarios, right? What parents should remain up front about with their teenagers prior to getting them a credit card is the story on how they started establishing credit. This is an all- inclusive detailed story about their mistakes and where it got them, as well. If your children hear about your mistakes and the damage that it caused, not only to your credit score but all areas it affected, it may deter them from following in your footsteps. There is a common fear amongst parents, though, that once you fill your children in on some of your old mistakes; it is almost like an invite for them to do the same. Just ensure that they understand the impact that having bad credit and being in debt can have. Teaching your children about hidden fees and interest rates is also something to avoid. Many teens do not understand interest rates, how they affect payments, and how making late or minimum payments can have a negative effect on their credit reports. There is no sense in just setting your kids up for failure. As parents, you cannot assume they know (even though they say they do) and help them in every way you can. Start Saving Now It may seem like crazy talk but speaking to teens about saving for retirement and explaining about how student loans accrue a large amount of debt in four years may help them mentally prepare themselves. Creating a safety net sooner than later has proven to be nothing but beneficial and it can be some of the best advice a parent can pass onto their teens. Predators Are Lurking Credit card fraud is committed almost daily, and credit card fraud protection is something that parents should teach their children from a young age. How to safeguard their personal information, as well as how to protect themselves from any form of identity theft is important for them to learn. Teens may be slightly more careless with their wallets, driver’s licenses, and credit cards. They may be trusting in their ‘friends’ who may turn out to be people who cannot be trusted. Little do they know that trustworthy people are harder to come by than they thought. Explaining the dangers of credit card scams that are out there will better prepare them for the future. Credit protection as well as consistent credit monitoring should be tools that parents equip their teens with before even considering giving them a credit card. Once in financial debt, it takes a long time to become debt free and if good budgeting skills are not passed down, your teenagers may find themselves walking a very difficult path for quite some time. Amy Johnson is an active blogger who is fond of writing articles on Finance and educating people to monitor their credit report on regular basis to minimize the risk of fraud. Follow her on Twitter to know more on educating teens about the credit card and identity theft.
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