Teaching your kids about credit at an early age can help them understand more about money matters down the road. Children are curious creatures and they understand more at their young age than we tend to give them ‘credit‘ for. So just like good values and moral behaviour, why not start talking about how to use credit responsibly as early as possible?
I was out with my daughter looking around and she asked if we could go into a nearby store to buy something… anything. I told her I didn’t have any cash with me so we wouldn’t be able to get anything.
She caught me off-guard when she said “But mom, you can just use your credit card, you know!”
This completely floored me at the time. Thinking back now, I should have somewhat expected it. After all, she had grown up seeing me pull out all sorts of cards to pay for items. This was ‘normal’ to her.
My daughter is seven years old so our conversation was fairly simple. I explained it as follows:
- Credit cards are not money that we own. It is borrowed money that usually comes from a bank.
- If we use a credit card to buy anything, we have to pay it back.
- You are able to get a credit card when you show you can be responsible enough and are able to pay it back (eg. when you are legal age, have a job and show you can be trusted)
- If you don’t pay it back (or on time), there are consequences which are negative (eg. you can lose your credit card, have to pay more back, etc)
It is not uncommon to have at least one credit card in every household these days. We have come to rely on the convenience of having credit cards for things like booking hotels and online travel etc. But credit cards are not as bad as we think them to be. It’s through the responsible use and proper management of our debt which allows us to have the convenience of access to borrowed funds. When used and paid back appropriately, we are rewarded with a favourable credit history.