10 ways to teach kids about smart credit use


One of the best gifts you can give your children is financial wisdom. Send your children on their way to college with a solid financial education free from debt-ridden credit card statements.

Here are 10 tips on how to teach your kids responsible credit card usage.

  1. Start teaching your child about saving money at an early age. Reinforce how to build up a savings account.
  2. Give your kids a solid financial education, including every aspect of finance, from the chequebook, opening a bank account and savings plans, to the mortgage, how to finance a car, school loans, income taxes and credit cards.
  3. Don't downplay responsible credit card usage. Don't just give them a little tip every now and then, sit down with them and be thorough about the ins and outs of signing on for a credit card.
  4. Show your teens how to balance a budget. Their eyes might glaze over if you do the household budget, so explain it to them in terms that they can understand, such as room and board, the cable bill, music downloads and fast food expenditures.
  5. Explain how to determine between a need and a want. Needs need to be factored into the monthly budget, but wants sometimes have to be set aside for another paycheque.
  6. Show them how you pay off all bills in full every month, even if it means having them watch you pay your bills online or at a banking machine. If they're really young, they will enjoy placing the envelopes in the mailbox for you.
  7. If they can't afford it, don't buy it. This is an important tip that can't be stressed enough, especially when the lean college years are upon them.
  8. Explain how credit is really a loan; it's not free cash. When kids watch you use your card to pay for an item, rather than spending cash, they don't realize that plastic is really a temporary method of deferring payment.
  9. Show them how you shred credit card offers received in the mail. Most households can receive several credit card offers each year. Most adults have plenty of cards already. When they watch you toss out unsolicited credit card offers, it may click with them to do the same when they are inundated with them in college.
  10. Let children learn by showing them responsible financial skills. Children learn through observation and they can mimic our behaviours. We want them to absorb only positive behaviors.

Teaching your children about finance and responsible credit card usage now will arm them against financial troubles later.

Written by Melanie Dixon.

Updated July 16, 2010

Most recent Student Stories

  • 5 money lessons -- and apps -- for kids and teens -- It's important to teach kids about money, and it's easy, too, thanks to these online tools and smartphone apps ...
  • Growing up: Your teen's first credit card -- The idea of giving your teen a credit card may make you shudder, but with proper guidance, plastic can be a great tool in teaching your older children money management skillsThe idea of giving your teen a credit card may make you shudder, but with proper guidance, plastic can be a great tool in teaching your older children money management skills ...
  • 5 credit card no-nos for students -- While credit cards can serve as convenient payment tools or emergency padding, they can quickly turn into high-interest debt traps for students who use them incorrectly. If you're a student with plastic, try these guidelines to avoid regrets later ...