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WHEN JUNIOR WANTS HIS OWN CREDIT CARD

It’s never too soon to talk to kids about money, and as for a card, it’s best to start them on one before they leave home, say perhaps when they are a junior or senior in high school. Let me give an example.

Before my daughter left for college, she got a checking account, linked to her parents (of course), and then later a credit card with a very low limit. The idea here was for her to learn to pay for things herself before she got out into the big bad world on her own. I like starting them on these things while they’re still under their parents’ roof, so they get practice, and when they decide on the 5 jeans, and then realize there isn’t enough dough left for lunch and gas money, guess what? They brown bag it to school and take the bus! Or they ride with friends, etc. There’s no harm in their experiencing the consequences of overspending while they are with you, and their limit is low.

You can get a card with just a few hundred dollars limit, and then help them pay it off in full and on time every month. This is actually very good because it builds good credit, it gives them practice, and they feel like a big shot! Not only that, they aren’t constantly asking you for to cover the pizza fund. Well, probably they are still asking, but at least your child can see how far a finite amount of money goes, and learn to adjust, or not!

Another good practice for them is when they lose a card. Sooner or later they will, and you can show them the process of quickly calling their card company and getting the card canceled. Don’t be too judgmental with them at first. They are going to make some interesting decisions, and that is good, because you are there to help out if and when trouble comes.

Another option is having a cash credit card. This is where you personally dump a certain amount of money onto a card, and then when the limit is spent, that is it. Your child doesn’t actually have a line of credit anywhere, but the experience is very similar in terms of using the card around town. I know a couple who would add a couple hundred dollars or so every month onto their son’s card, and then he was responsible for his expenses that month. I think this is a great idea as a precursor to actually having a credit card. You could do this at 16 years old, and then move up to a credit card afterwards.

Much in the way there is no magic number regarding allowance, there is no magic age for this to begin. It has a lot to do with your child’s maturity and impulsiveness. Most kids think it is very cool to have their own card, and they usually can’t wait to be in charge of their own money, because they typically believe their parents are holding out on them. There is only one way for them to understand that when the money is gone, and it is only the middle of the month, that they now just have to make do until the next pay period. Trust me. You can preach and holler till you’re blue in the face, but not one of us is capable of understanding this until we experience it for ourselves.

One last benefit of them having their own card, is that their expenses are itemized for them, and this is priceless! They will tell you, themselves, their pastor, rabbi and creditor that they “didn’t buy anything!”, and can’t understand why the stupid credit card company is being so mean and actually froze their card because they went over the limit. Ahahahahahhaha. It’s so cute to see their little eyes bug out of their heads as they scan the bill and find all their merry little spending sprees spelled out for them, one after another, as they wail “Oh, I forgot all about that one!” The final beauty of this is that you don’t have to say a word, since it’s all there in black and white.

So always bring money into the conversation with kids, but keep it short and sweet for the most part. A long exegesis is the short way to turning them off, so just make sure they know the basics and that they see you have a good attitude about money. Remember, their emotional intelligence is superior to yours, and they can sniff your fear and loathing a mile away, if that is what you’re bringing to money. As Catherine Aird said, “If you can’t be a good example, then you’ll just have to be a horrible warning.” Well, it’s never too late to learn, and there’s no harm in learning even as you teach your child.

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