The typical American gets a first credit card at age 20, often while still living at home, or not employed full time. And many of these typical Americans who get their first credit card while they are not employed full time do not know much about managing their finances. As parents, we can give our children a good head start in life when we concern ourselves with their education in school and see to it that they get a basic education in financial planning at home.
As a parent, you can set boundaries on how much you tell your children about the family finances. What you don’t want to do is leave them completely in the dark so they grow up with no idea of how to manage money.
Show, Don’t Just Tell
You know that setting money aside upfront to use for a vacation or other desired discretionary purchases can help reduce the temptation to use credit card financing to give yourself the rewards you feel you deserve. Make sure that your children know this too. Watching the vacation fund accumulate can bring its own satisfaction. But how will your children know this if you don’t share this knowledge with them?
For example, you can let your children know that the family is saving up to go on a vacation and let them know that you have a certain financial goal and a certain date in mind for the vacation.
You can also help your child save allowance money or money received as a gift for a certain item he or she really wants. Perhaps you can even offer to match the money once your child has saved a certain amount.
Of all the gifts you give to your child, the gift of a financial education is one that will last a lifetime. And when you model sound financial management for your children, you are also helping yourself.