Teen Credit Cards - Lessons In Responsibility
Let’s face it, your teens are growing up and want a sense of freedom and independence. While you, the parent, don’t want to see your kids grow up and leave the nest it is a fact of life that they will be out on their own in a few short years. Given that your teens will be leaving for college or entering the workforce sooner than you might think I believe it is best to start teaching your children fiscal responsibility at the earliest possible age. Did you know that according to the Jump Start Coalition for Personal Financial Literacy that nearly one third of high school seniors have a credit card? This to me is a frightening statistic especially if those teens have not been armed with sound financial education. To me the combination of a teen and an unsecured credit card are a ticking time bomb of financial disaster Yes, that’s right teens are getting themselves into financial trouble out of the gate. Parents must start teaching their children about financial responsibility before their teens acquire credit card debt.
Why not start teaching them about credit cards right away to address the problem of credit card debt long before it becomes an issue. You owe it to your kids to provide the life skills they will need when they are young adults. I only wish my parents discussed credit card spending with me when I was in my teen years. At the tender age of 18, I acquired my first credit card and within the first month of holding my first credit card I had the $1000 limit maxed out. While a thousand dollar line of credit isn’t a huge amount of debt, the problem was the poor credit spending habits I had developed.
Here’s what happened that created 9 years of me digging out of debt. It started with the $1000 limit on my first credit card that I pushed to the limit. When I saw that I was really only servicing the interest with my minimum monthly payments I started paying larger amounts on my card. It was when I was close to having paid down half of the $1000 balance on my credit card the credit card company increased my limit to $1700. Since I had not had good credit spending habits instilled in me at a young age, I saw this as some free money and decided to go on a road trip with my buddy. I looked at the increase in my credit limit as having $1200 in available funds to go have some serious fun. At age 18 and having over a thousand dollars in credit paid for gas and lots of bar bills (Yeah, we managed to get into a few bars). Within 9 days my credit card was maxed out again! Now I owed $1700 on my card and the cycle of paying down my card and getting credit limit increases repeated over and over again until I my balance owing was roughly $15000! That took me nearly 9 years to pay off! Help your teens avoid the nightmares and headaches of digging themselves into debt by teaching them how to use a credit card and track their spending right now. Even if your kids are just entering their teen years, the earlier you can start teaching them the better off they are going to be when they become young adults with real world bills and financial responsibilities. For the most part parents have tried to teach their kids about money by providing them with an allowance which they must budget until their next allowance day.
This is a good start to teaching your kids how to budget however the difficulty in having maximum impact when you discuss financial issues with your kids and their spending habits with their allowance is you have no means of tracking their spending. The money is placed in your teens hands and the money leaves their hands without a trace. There is one credit card company that is changing all that, it’s the Allow Card. The Allow Card is a prepaid debit MasterCard that gives you, the parent, online access to view your teens spending. Now you can have a real conversation with your child about spending. The way this program works is you fund the card via your credit card or bank account and then your teen is free to spend the funds until they are gone. You then can login online to view where your teen has been spending money and then can discuss strategies for stretching their allowance. Begin educating your teens about responsible use of a credit card right now with a card such as the Allow Card. Not only does the card provide you with the opportunity to discuss credit card spending with your kids, there is a series of financial lessons that your kids will receive to further their financial intelligence. As a parent you are responsible for educating your kids in financial matters, don’t leave it to the school system, you must take action to teach your kids about money.
The time that you invest now with your teens are lessons that will last a lifetime.
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