The Credit Question
For the past few months, I've been sharing my thoughts about credit with you in my "Credit is as Credit Does" series. This month's issue has the final chapter of the series and I urge you to read it again and share this information with other family members and friends. I can't stress enough my emotional viewpoint concerning this important subject and how it will affect your life from start to finish. Hey, we all make mistakes but the trick is to not make too many, and to correct the ones that could cause future problems. Some errors spell disaster to your financial life and cause your personal situation to become a nightmare. It's definitely something we want our children to avoid and the best way to make sure they don't make these types of mistakes is through education.
A weekly allowance is a great way to teach the kids about how to handle money and now you can do it the high-tech way. Teach them about the fine points of making credit decisions at an early age. Make sure your teens know what to do with this valuable trust. Take them to the bank and let them hear firsthand how to handle credit. Most banks offer special programs for teens and young adults that help teach them about using credit as a valuable tool while learning proper spending habits. Many institutions have a pre-paid and "reloadable" card that allows a parent to load what they feel is the "right" amount of money. This type of program will introduce your teens to budgeting, because you decide how much goes on the card and you set maximum spending limits. Most banks allow kids 13 and older to handle this type of "credit card." Teens can use these cards at the mall, over the phone, even online. This isn't a credit card but rather more like a debit card that has a set amount of value -- a value you set. It's an option you might want to check.
You should also call your child's school to ask whether or not they offer financial courses. If they do, make sure you sign you kids up. If the school doesn't offer these type of courses, request that they start. Buy books, search the Internet, read magazines, listen to radio and television programs on the topic. And don't forget to talk to them to find out how they're progressing, answer their questions and gently guide them to proper credit management. Remember, as you teach the kids about profitable financial habits, I'll bet you'll learn a thing or two yourself. I find that the more I teach, the more I learn.
Credit isn't a physical entity. It's not something you can physically hold, smell or taste. But this intangible concept guides the "yes" and "no" answers in your life. It can spell freedom or create a devious prison that eventually consumes your confidence. Credit is not about material things. It's totally about trust.
Originally published in James Dicks: Buy*Sell*Hold magazine.