Personal management of money grows with the child’s development. You will start noticing that your child is counting and making purchase’s decisions related to his pocket money. As parents, we should teach our kids strong financial skills, how to manage their cash flow and how to be responsible in using money. Lots of people consider credit cards as taboo and kids should not have them. What are the inconveniences and the advantages of giving our child a credit card and how should we teach our child to use it in a conscientious way? It is a dilemma that every parent goes through.
When used wisely, credit cards can be very important for kids:
It can teach your child account skills.
When you teach your child at a very early stage how to use the credit card wisely, he will fall in the good habits of using it safely and responsibly.
Kids will understand that credit cards are not a magical way to get money. As much as you load it with money as much is your capacity of purchasing.
The child will carry less amount of money in his pocket. If the card is stolen you can cancel it directly without your child losing his money.
As much as it looks safe to have a credit card it is very important to sit with your child and show him the mechanisms of credit cards. You should start by giving your child a prepaid card with a limit. At the end of each month get a statement of account and discuss it with your child if there was any bad purchase or mistakes that he can avoid in the future. Teach your child to keep receipts with him and compare them with the statement. Explain the charges and interests every time he used the card and the mechanism of payments. It is very critical to teach your child how to manage his money throughout the month. If his card gets empty, do not reload it with money till the beginning of the next month. This will teach him how to control his purchases and how to take his decisions carefully.
With this, your child develops a sense of responsibility on how to manage his cash and how to deal with credit cards in the future.