There’s an old song which I’m sure many of the readers will remember. It says, “Teach your children well, their father's hell did slowly go by”. Teaching our children is not always with a good example. Sometimes we have to tell them about our mistakes with credit cards and teach them how not to do the same, rather than repeat their parents’ hell.
Learning How To Fight By Not Running Away From The Battle
Practice makes perfect, they say. You learn how to dance by dancing and you have to actually ride a bike, in order to learn how to do it. The same thing happens with finances. Your adolescent children will one day have a credit card of their own and they must learn how to manage it by having an extension of yours.
Don’t Spend What You Don’t Have
It is no good for them to have an extension with a high credit limit, however wealthy you are. One day they will be on their own and if they don’t know about limitations, they’ll soon be in trouble. Why not limit their credit to, say, $100. Let them feel that they want more. And until they learn how to obtain the cash to pay for it, there’s no way they’ll have an increase.
The more they have, the more they will spend. They don’t know how to handle a budget, since they are not yet working. Maybe their weekly allowance is all they have, so they may want to increase it by doing odd chores on weekends and things to that effect.
Close Follow Up
Always be constructive when following up on their expenses. They are learning and they need your help. Maybe you’ve never had any credit card defaults, delinquency or minimum payment. On the other hand, you may know someone who has had problems and you can mention it as an example not to follow.
It’s no use leaving them to trip and fall, because in the end, you will be saving their meat and potatoes. But if you set a strict limit they will know that beyond that limit there is no way they can possibly use the
card.
If You Have Had Trouble…
…then you can remind them of what happened or tell them about it if they were too young to be aware of the hardships. The whole point is that they won’t benefit at all if you leave them to learn the hard way. What they can spend and what they can’t, should be the same as telling the difference between what belongs to them and what belongs to someone else.
They Will Eventually Be Thankful. Tell them about the interest rate they pay if they refinance, what they pay for the normal use of the card and what they must pay as a “punishment” for not paying on time. The younger they are when they learn this, the less they’ll think it’s just “modern business”. Their financial innocence will make them more realistic and aware of the cold facts of today’s domestic economy.
