How to Teach Your Kids about Credit
It’s never too early to begin educating your kids about money and credit. In a world where children are bombarded by advertisements for toys and games, it can be helpful to teach them the nature of money and warn them about the powers of advertising designed to keep them constantly wanting “more.”
Play “Credit Games”
If you want to teach your kids about how credit cards work, set up a scenario where they can learn all about “buy now, pay later,” and the concept of interest. While it may feel a bit heavy-handed, you could try offering them something they want today (dessert, a playdate in the park or video game time) in return for doing something they’d rather not (think chores, study time or eating vegetables) later. And for interest — one treat or one night of staying up past bedtime could equal two days of paying their dues with veggies and chores!
Give Your Kids an Opportunity to Earn
Instead of giving into the whims of your kids when it comes to purchasing toys or games that aren’t “essential,” give them opportunities to earn points or real money. If they want the latest Sesame Street toy or Xbox game, make them work toward that goal. When they reach the goal, you can give them the opportunity to save or invest their points or dollars, or they can have the thing they want. Either way, they will have learned a positive lesson.
Conversely, you can always revert back to the credit game, but keep in mind, it’s not always easy to enforce the consequences of credit on your kids.
Model Good Money Behavior
Children are extremely perceptive and are always watching how you behave, whether it’s obvious or not. Do you practice healthy money habits? If not, that’s okay. Today is a new day, and you can make good choices. Instead of going on a fast fashion run at Target, choose to exercise restraint and shop at a thrift store, or better yet, don’t go shopping. Instead, spend some time reviewing your budget and setting goals. Involve your kids. Tell them about how you’re saving up for the next family vacation. Maybe they’d even like to contribute a few of their fun bucks toward the greater good!
If you’re not in a place where you feel like you’ve got the resources to teach your kids about credit and good money habits, chances are, you’re struggling with your own debt problems.
You are not alone!
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