As parents, teaching money lessons, especially about credit, to your kids is important for them to succeed as adults.
One of the most crucial lessons is to show them how credit works to enable them to become financially responsible.
1. Start with the basics. Explain credit terms and help them understand the concept of using credit in their lives.
2. Teach them that credit cards are not free money. Use books from the library to help teach them the idea of paying back.
3. Explain that there's a limit to what they can buy. This will teach patience and how to not rake up big balances.
4. Use the grading system to explain how your credit card usage is measured just like a report card.
5. Show them that credit scores matter and the effects of not having a good score.
6. Teach them to use a credit card only if they can pay it back. Walk them through your own repayment process.
7. Help them understand the difference between their own money and borrowed money with debit vs credit.