We’ve all heard of that one peer or friend in highschool who had access to their parents’ credit card, who may or may not have abused their spending powers. But contrary to popular belief that all kids will abuse this new power, many parents are now putting their children as authorized users on their credit lines to teach them a valuable lesson on financial success and security.
Get a head start
Many of us go off to college with an amazing GPA, and great aspirations but little to no knowledge about how real life finances work. Giving kids the chance to learn this while they’re still under your wing allows them to see how difficult it is to balance your finances rather than go overboard and max out credit cards. Keeping your kids under your accounts also lets you see how they choose to spend, and you can correct bad habits asap-- a valuable lesson they’ll eventually appreciate in the long run.
Create good habits
Like any good parent, you’d want your child to develop good financial habits and responsibilities early on so their future will be more secure. Giving them access to your credit card might sound a bit backward, but it can broaden their perspective on how money is earned and how a credit card isn’t just meant for buying things out of want. Set a budget for how much your kids are allowed to spend and monitor what they choose to spend on; making sure they’re thinking it through before using their card.
Financial Security & Importance
Credit cards to a teenager might mean a gateway to buy anything and everything, but the sooner they learn that credit cards also come with a lot of hidden fees and potential debt, the sooner they’ll reconsider their spending habits. For those who have a high credit score, sharing that with your child helps them get a head start in the credit world, especially as they mature and grow into young adults. This also makes it the perfect time to let kids know their limits with a parent’s card and the risks and retributions that will happen when they abuse their spending power.
The next time you’re asked to buy something for your kids, consider letting them pay it off themselves to see how it really is to purchase and budget based on what you can and can’t spend!