6 Back To School Money Lessons For Little Consumerists In Training

Ah, children. We know you’re trying your best not to mess yours up, but teaching kids about money is hard. If it wasn’t, this credit card would not even exist. So what do you do?

Kiplinger’s has put together a list of 6 back-to-school money lessons for every stage of your child’s development. Does it work? Well, my parents did this stuff with me and I don’t live under a bridge or anything, so it certainly can’t hurt.

Remember: teaching your kids about how the financial world works is more valuable to them than just giving them money. They’ll thank you when they’re 25 and don’t have credit card debt!

Kiplinger’s Back-To-School Money Lessons:

  • Ages 3-5: Big-Picture Years. Keep things simple and don’t expect too much. Encourage kids to put coins in a vending machine or pay the ice-cream man. They can play with fun savings banks, learn the difference between pennies, nickels and dimes, or collect state quarters. The more hands-on the activity, the better.

  • Ages 6-7: Time to Start an Allowance. How much to give? Start with a basic weekly allowance equal to half the child’s age. Tie the allowance to “financial chores”—spending responsibilities that the kids take over from you. To make the connection between work and pay, give your children the opportunity to earn money by doing extra jobs such as vacuuming or raking leaves.
  • Ages 8-10: Bank on It. Help your kids open their own savings account. Should you require your kids to save? Not necessarily—but you can have them divvy up their allowance into pots of money for spending, saving, charitable giving, even investing. Have your children save toward a goal, whether it’s a toy or a new baseball glove. And you can always encourage kids to save by matching what they put aside—for your very own family 401(k).
  • Ages 11-13: Parent Power. As you head into the difficult ‘tween years, remember that parents have power. Kids will listen to you if you have a clear message and deliver it consistently. Expand their allowance money to include more discretionary purchases such as video games and movie tickets. Kids shouldn’t hit you up for 20 bucks every time they head to the mall. Having to chip in their own money puts a natural brake on spending. If you’re an investor, introduce them to the stock market with small purchases of stock through sites such as http://www.ShareBuilder.com and http://www.MyStockDirect.com.
  • Ages 14-15: Stick With Cash. Parents should decline prepaid debit cards which banks aim squarely at this age group. Stick with cash. Even at this age, plastic of any kind isn’t as real to kids as money they can see and feel. Expand their allowance to include clothing, concerts and other high-school entertainment. Encourage them to get a job—at least over the summer.
  • Ages 16-18 and Into College: Hold the Plastic. Teens don’t realize that a credit card is not free money. They need to know that when you use a card, you’re borrowing from the card issuer, which will charge you a high rate of interest. Cash is still king. Help your kids open a checking account (and get a debit card) so they can learn how to balance a checkbook—either by using a check register or online entry—before they head off to college.

The only thing we’d add is that you should custom tailor this list to suit your child. Janet Bodnar, who wrote the article summarized here, strongly believes that no one should have a credit card until they’re a senior in college, and based on the statistics we read about college students it’s almost impossible to argue. However, if you take the time to really and truly educate your child about the benefits of using a credit card wisely (as in, not ever, ever, ever carrying a balance, etc.) then we think you as parents could consider adding your college student as an authorized user on your credit card so you can monitor their expenses and offer guidance. Maybe even consider a charge card where the balance must be paid in full each month.

Again, you know your kid better than a list does, and if you are a kid and you’re reading this list… Congratulations. Maybe you can use this list to teach your parents about money!

The Last Word on Kids and Cash [Kiplingers]
(Photo: Sa_Steve )

Comments

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  1. GavinEstecado says:

    Wow, I clicked back to remind myself of how bad that “Worst Credit Card in the World” post was (the link in this post)….those terms on that card have WORSENED since the post was made…

  2. seldon452 says:

    What is up with the size of that text…

  3. Shappie says:

    All the text!

  4. Etoiles says:

    I don’t think it takes an allowance to teach financial savvy. And a kid can have a savings account in a bank from day one — I remember my mom taking me to open mine when I was three. I liked the passbook.

  5. Consumerist-Moderator-Roz says:

    @seldon452: Email technical issues with articles to the editor. Don’t put them in comments. Thanks.

  6. milk says:

    I don’t have children, so I lack the direct experience outside of partially raising my little sister (11 years younger). I come from a long line of no-allowance-givers, as does my boyfriend, and I can’t say either of us agree with the idea of an allowance. Along with so many other areas where I’m starting to sound like my mother, parents don’t get paid to do chores, so why should children? It’s part of being a family unit, working together. Mine and my sister’s income largely came from holidays, birthdays, and the occasional $10 our grandmother would slip us on the sly.

    My sister just turned 14, and she’s been saving money since she was tiny. When she wanted to buy something frivolous like a cheap toy, we had her pay for it. Of course we still bought her things, but the cheap stuff we made her really think: do you want to give up your money for that? Right now she’s sitting on a couple hundred bucks. When she stayed with my boyfriend and me this summer for a week, she even took me out to eat and bought me a necklace. :)

    It’s scary/sad someone that much younger than me is more financially responsible. :/ We just took all the terrible things about me and changed them in her, ha.

  7. anatak says:

    “However, if you take the time to really and truly educate your child about the benefits of using a credit card wisely (as in, not ever, ever, ever carrying a balance, etc.) then we think you as parents could consider adding your college student as an authorized user on your credit card so you can monitor their expenses and offer guidance.”

    Head knowledge and behavior are two very different things. Parents time is better spent teaching frugality, money management, and to stay out of debt period.

  8. Walrii says:

    @me and the sysop: I was raised the same way, with no allowance. My parents would give me money if I needed to go somewhere / do something. Of course, I had to let them know what I would be doing with it. When I finally got my own job, I hoarded it and saved it up as much as I could, because I had never really had money of my own and I wasn’t about to dump it down the drain after all my hard work.

  9. waffles says:

    @anatak: Or there’s what my parents are doing for me. I have a credit card in my name instead of them helping to pay for books and stuff. But the bill goes to my parents. So they see what I spend it on, and they ask about things all the time.

  10. Zeniq says:

    Ok, wtf. I knew that a credit card was not free money since I was like 10. I had a credit card by the time I was 16 both to buy gas and make online purchases. I was an authorized holder on an account under my dad’s name, but I was the only one who used it, and I paid the balance on it.

    Sure, some 18 year olds are not wise when it comes to plastic, but not everyone thinks a credit card equals free unlimited funding.

  11. wilstanton says:

    I think it is a little scary to say that someone should be roughly 21 before they get a credit card, and I don’t get the hatred for the debit cards. This is the currency in which we deal (okay, I know it isn’t really currency, but…,). It would be smarter to teach the young’uns how to use these tools wisely, as soon as they are ready for it. I’m old enough that debit cards weren’t widely available when I was even a young adult. My parents taught me to be afraid of plastic. I had to learn the proper use on my own, in the streets, where I also had to learn about sex and drugs. Maybe my parents just didn’t like me, but that’s another story…,

  12. floraposte says:

    @me and the sysop: Pay for chores is different than an allowance, though. The allowance theory is that we’re all in this together, and kids get a modest share of the family financial benefits just as they get a share in the food and house; after all, it’s pretty common for married people to have arrangements that allow for people to spend money they didn’t individually earn, and in most families it’s pretty uncommon for adults to get slipped money on the sly by their grandmothers.

    Not that I think the theory behind an allowance is crucially important–I think the main thing is that it does, if handled thoughtfully, give a kid some important early financial education.

  13. neilb says:

    All of this advice would be useless if kids see their parents being financially irresponsible.

    I am guessing that parental financial responsibility is the best predictor of child financial responsibility.

    I have planned well and never had any sort of negative financial experience. My parents did only a few things on this list…but I saw that they spent conservatively even though they had the option not to. They had obviously learned from their parents (who learned about money during the depression).
    I feel bad for the kids whose parents try all of these points but appear hypocritical. Try explaining to your kids why they cannot have a toy but you just bought a big-screen TV and drive a leased Lexus. Actions speak louder than “10-point” lists.

  14. cobaltthorium says:

    @wilstanton: I agree! I didn’t even know that you could buy things on credit until I was like, 15. I applied for a credit card the day after my 18th birthday, I’ve never carried a balance, and now I have a card that ties into points at the grocery store. I’ve racked up enough points in a year to get ~$80 worth of groceries, FREE!

    Tell your kids how to use plastic to *their* advantage – don’t carry a balance, get a card with no annual fee, and get one with points for stuff you’d buy anyways, like food.

  15. ltlbbynthn says:

    @floraposte: My mom didn’t give me an allowance either, for the same reason that I should feel like I have a stake in keeping the house clean and such, and not think I’m entitled to be paid for it. She taught me by keeping me informed and involved with the bills in the household. But she did put me on her credit cards before I was 18, and now those are black marks on my credit.

    Despite my credit issues, I think I am better off than my boyfriend, who’s parents make him chip in whatever for bills, but they don’t involve him in the actual bill paying. He was 20 before he opened a checking account, and he didn’t know that debit cards weren’t the same as credit cards. That’s a serious failing on his parents’ part, but he does have a good start on his credit.

  16. LincolnK says:

    I’ve read that tying allowance to chores is a bad idea, because when the kids are old enough to get their own job, they disregard chores at home because it’s of little benefit to them.

    On the flip side, no allowance at all doesn’t seem like a good solution. If the kids never get used to having money (outside of gift money), how are they going to learn to manage it? Someday they will have a job with regular income, and won’t know what to do with it.

  17. chiieddy says:

    However, it is pretty important to get that first credit card while in college (even if it is the last year you’re there) so you can just get that little bit of credit history. It’s much harder to get the card once you’re out and have a good paying job if you don’t.

  18. LankanDude says:

    @ me and the sysop & Walrii

    Yeap, Same here. I also occasionally skipped a lunch (at school) to save to buy something I like (but not need)

  19. Decaye says:

    I’ve had a credit card since I turned 18, and barely had a job in that period of time (2 years), yet I currently owe $34 on it. Which is weird, considering that I can’t even comprehend that it’s not free money.

    Being financially responsible isn’t that hard, don’t judge me based on my age, we’re not all idiots.

  20. @me and the sysop: My wife didn’t get an allowance, but I did. We differ on the topic, but what we finally agreed on is Dave Ramsey’s idea of a “Commission” – you get paid when and if you do work – if you don’t work, you don’t get paid.

    I feel that a commission is a great opportunity to teach money management skills and hard work, which in my mind, outweighs the “well, I don’t get paid to vacuum, so you don’t either” argument.

    Build an early understanding that work = money, and hard work = more money, and it will stick.

  21. Another important concept – teach kids to give to charity out of their own funds.

    I always was taught to tithe to my church, and I maintain that habit as a conscious commitment today. If you’re not a churchgoer, find a local charity for the child to financially support.

    It’ll build good habits for later, and improve the world.

  22. PirateFrankie says:

    @InfiniTrent: Yeah….I’m not so sold on the forcing kids to give to charity. How about volunteering? I think both are valid ways to make the world a better place. As people get older there’s certainly a trade-off – my time is more valuable to me so I’d rather donate than volunteer.

    Now that’s a valuable lesson to teach kids – the value of time.

  23. timmus says:

    Usually this kind of advice ignores the root causes of money mismanagement: consumerism and affluenza. Giving an allowance and using a piggy bank only goes so far. The kid has to be brought up with the right philosophy about material goods and money.

  24. jonathan. says:

    I’m about to start my second year in college and got my credit card during my first year.

    I use it often and get the balance pretty high, but I almost always pay it off in full. I’m about to mail off a $700 check to get this month’s use down to zero.

    Saying no student should have one until senior year is too general. Everyone is different and I very clearly understand it is not free money and that I have to pay it back.

  25. ndkchk says:

    I hate the idea that debit cards are a cure-all. It’s almost as easy to empty out a checking account and start getting hit with fees as it is running up a huge credit card bill. Also, people are more aware of the possibility of making those mistakes with credit cards. Debits have gotten a much safer image.

    If I have a choice between giving an essentially free loan to my bank–and with the interest rates most large banks offer, that’s what a checking account is–or getting a free loan and cash back from my credit card company, I know which one I’m choosing.

  26. datruesurfer says:

    I disagree with being anti-debit card, as it really taught me how to be responsible with my money and keep track of where it goes. At age 13 my parents got me a Visa Buxx card (www.visabuxx.com). Depending on what bank you get it from, it costs roughly $10 to get. Teen gets the card in his/her name, activates it and can only spend up to the amount preloaded on the card. If they try go over, the card is declined rather than getting hit with an overdraft. The parents add more money onto the card instead of cash allowance and the cycle continues. Both the parents and the teen can go online and see any purchase that has been made. I really don’t see how something like this is harmful at all…

  27. mackjaz says:

    Even though it’s not strictly financial in nature, teaching kids to delay gratification is extremely important. It’s analogous to having them kick in “their” money.

    It’s very easy – when your child wants something, say a cookie, offer them a choice: one now, or two later. It gets them thinking about longer-term consequences and benefits.

  28. TheFalconer says:

    I actually disagree with this article. I’m an avid reader of the Consumerist and generally agree with what they post, except this I find disagreeable. I’m only 17, and didn’t get a bank account till I was 16, never received allowance, and currently make 15 an hour at a full time job. I also never use cash, I only use credit.

    I’m not sure if I’m an outlier here, but I’ve never had any issues financially balancing my income. That said, I don’t pay for shelter or food, which would take a considerable chunk of my funds. I do, however, pay for gas and my cellphone bill. I feel that never receiving allowance, and having to be extremely thrifty with what I receive is a lot of what actually helps me on a day to day basis. That’s why I read this blog, because I don’t like to spend money flagrantly, I enjoy knowing how to get the best deal, and if I’m not getting a deal, I won’t buy something.

    Finally, the bit about credit card debt — because I don’t have time during the school year to work, I have to last off the money I made during the summer, which near the end becomes a real pain, since I need to monitor every single cent I spend, so I don’t go into credit card debt. I would say having a credit card in the years before you go off to college is actually better than getting one later, because in those years your parents are around, and if you do end up going into debt, you have someone to bail you out (potentially). Once you go into credit card debt, you’ll hopefully learn your lesson, and then, once you’re on your own, you’ll know how to more responsibly manage your funds.

  29. Garbanzo says:

    I went to a drug store with my sister and her two-year-old. My sister told the kid that she could buy ONE thing in the store. As we moved through the store the tot kept finding new and different objects of desire, and my sister would say, “Okay, if you want the coloring book you have to put the stickers back” or whatever.

    This was a deliberately constructed early lesson in financial management on my sister’s part. You have to make choices, you can’t buy everything you might want to, yada yada. Seemed to work well.

  30. knyghtryda says:

    I was absolutely clueless about financials till my senior year of high school, when all at once I got a checking account, a credit card, and a debit card. I had a fast track learning experience in balancing a checkbook (online) paying my bills (online) and transferring money (online). After that point I went along and taught my parents how to do those things…

  31. Tiber says:

    @LincolnK: I think you could probably make the case either way. On the one hand, it could lead them to avoiding work that doesn’t have a reward, like you said. On the other hand, encouragement is important. For me, the combination of no allowance and parents that rarely punish meant that I grew up to be pretty lazy. I had no incentive to do the chores, since I didn’t care if the house was dirty or not. I did only the minimum, and I put that off as long as possible. So here I am now, trying to get break my bad habit and keep my place at least somewhat clean.

  32. HeyYouGuyss says:

    First: I hate using college as an example of the real world. College is all about debt, folks, and anyone who doesn’t emerge in the red is either a liar or completely spoiled.

    Second: I agree with a few posters on here: putting an age restriction on a credit card is stupid. I got my first when I was 18 and I still have it today — only now I’m some super-points-earning diamond-amazing member. If I had started 4 years later, I wouldn’t have those perks, nor would I have the same (excellent) credit score. I carried a balance all through college, and haven’t carried one since I’ve graduated (4 years ago). I’ve also never come near my credit limit on ANY card, ever.

    The funny thing is I tried to switch to using a debit card in college instead of carrying a balance on the credit card. Guess what happened? My spending habits never changed and I got hit with THREE overdraft fees. That’s about $100. I now never use my debit card for anything other than taking a small amount of cash out of an atm, and I’ve never come close to an overdraft fee since.

    There is a difference between manageable debt and financial crisis. Those who can’t see that difference will continue to run from credit cards fearfully shrieking “cash is king!!” at the rest of us…as if we’re asking for finantial ruin by whipping out that AmEx. (BTW, I’ve gotten 20K skymiles to date with that AmEx, thankyouverymuch).

    Moral of the story: people who can’t handle their finances will rack up the credit bills AT ANY AGE.

  33. floraposte says:

    @ltlbbynthn: Again, you’re talking as if an allowance was a linkage between chores and money. It’s not that “as long as you do your chores, you get an allowance.” It sounds like posters who grew up without allowances were still regularly given money for necessary spending anyway (otherwise skipping lunch couldn’t get them any additional money, so I’m not sure it’s all that different, save that an allowance is explicitly making the budgeting the kid’s problem while giving them lunch money is making it the adult’s.

    @neilb: I think you may be right about following in parents’ footsteps, but wouldn’t it be interesting if this is one of those things, like smoking or divorce, where the correlation of behavior exists in biological families much more than in adoptive? It’s amazing how much that feels like free will or training turns out to be a genetic predisposition.

  34. @Tiber: I too am torn. My parents were adamant that allowance not be tied to chores; you do your share of chores because you’re part of a FAMILY, and everyone pitches in and everyone takes care of each other. An allowance, OTOH, was received to help us learn about money management, and was regardless of chores. (If your kid gets the flu for a week, do they get paid sick leave from chores?)

    On the one hand I see the wisdom here, and I never had trouble figuring out that money comes from working — I started working for pay when I was 9. (And half of all income I got from working had to go in the bank until I went to college.)

    On the other hand, lots of my friends were paid for chores, and that seemed to work pretty well too.

    I guess the lesson from that, and from the comments here, is that it doesn’t matter so much HOW parents teach their kids about finances, but THAT they do it in a thoughtful way that conforms to their values.

  35. opsomath says:

    Dude. People got paid for doing work around the house? I just kind of, y’know, had to.

    I don’t feel like that was a bad thing, either. It’s not like I get paid for washing dishes in my house now.

  36. Quilt says:

    Why’s the font so huge? Is it just me?

  37. Quilt says:

    Oh, and to comment, my mom did all of those things. Now I’m 26 and have absolutely no debt, even after 4 years of college (and a fifth coming up).

  38. Rctdaemon says:

    Having had and used a debit card since I was 14, I don’t believe that I had felt that the money on it was any less real than the cash in my wallet.

    I also resent the fact that apparently “Teens don’t realize that a credit card is not free money.” I knew what I was getting into when I got a credit card (which was shortly after I turned 18) and have dedicated money each month to paying off what I charge to it.

    I guess that comes from having a single parent that stressed responsibility.

  39. Drowner says:

    I would really like to read this article, but the front is currently at VISION IMPAIRED. Could someone behind the scenes please fix the coding? PREASE?

  40. theRIAA says:

    “Ages 6-7: Time to Start an Allowance”

    i think i got like $10 a week allowance when i was a kid. 1/2 the child’s age is crap.

    and don’t reward children for doing “extra” chores. if my parents told me to pick up the yard, or vacuum the stairs, i did it, or else i wouldn’t get any allowance… although i do recall a time my parents paid me a penny for each pinecone in the yard i picked up… what a ripoff.

  41. madanthony says:

    Making the kid wait until they are a senior in college means they are loosing three years to establish credit. Sure, you can add them as an authorized user, but there has been talk about ending the loophole in terms of your credit score.

    I think it should depend on the kid. I got my first card right when I turned 18 (student Citibank card with a $500 limit). Aside from one late fee, I paid my balance in full, and got a second card my senior year. I think it helped having a longer credit history when I bought my house at age 25.

  42. TomCruisesTesticles says:

    @Eyebrows McGee: I had a sort of middle ground to this. I wasn’t paid for regular chores such as dishes, taking the trash out, etc, because those things need to be done in any household and it’s the shared burden of all family members. However, I did get spending money for certain “above and beyond” chores, such as washing the cars, gardening, cleaning the pool, pressure cleaning, etc.

  43. TomCruisesTesticles says:

    @TomCruisesTesticles: The point being, I guess, that you shouldn’t need an incentive to do necessary functions such as taking the trash out and doing the dishes, lest you become a complete slob, but manual labor should be compensated. I always thought this was a great idea, but I could be alone

  44. colorisnteverything says:

    I had my own credit/debit before I was 18. I was 16 when I got it and it was in no way a bad thing. I got a spending allowance and usually used it to buy things my parents would send me out to get – groceries, things my sister needed for school, doctor’s appointments, etc. Also, my parents could give me extra money if they thought I needed it for the occasional shopping trip.

    I was, thus, able to get a card when I was legally able to on my own. I now have “excellent” credit, have never carried a balance, and have my own student loans.

    My Dad is a banker and he sees credit as a great way to keep yourself save when buying things anywhere from the mall to on a trip, but he does not believe in unnecessary debt. My parents don’t carry a balance either.

    Therefore, I think (depending on the child) getting a credit card is really more of an advantage to the parents. It’s better than having to deal with cash (this coming from a person who never carries it).

    We didn’t really get an allowance after age 8 or so. Our parents bought us the needs and if they thought we deserved it, the wants.

  45. @madanthony: I think the credit history argument is a good one. I have an insanely good credit score because my parents let me get a credit card when I went off to college and I handled it responsibly. When you’re 25, which is a normal time to be doing things like buying a house, your history would be about half as long if your parents made you wait until you’re a senior.

    There’s also something to be said about parents who micromanage their kids life from 1000 miles away by training them to be dependent on their support. (e.g., “You’re not allowed to get a credit card, even though you’re an adult. And if you get a tattoo, we’re not going to pay for anything. And since you have no credit history, you’ll have a tough time living without our generous support.”)

  46. xman31 says:

    Okay, yeah yeah, cue the don’t-use-yourself-as-an-example speech.

    I just turned 19. I got one of those prepaid cards when I was 13. I got my first checking (joint w/ my mom) account when I was 14. I had a card on my mom’s Amex account when I turned 15. About a month after my 18 birthday, I got my own credit card w/ a500 limit. After I had this card for 6 months, paying early, they upped the limit to $2,000. Now, this summer (a mere 10 months after my first card) I got a Store/Visa branded card, Amex charge, and an Amex Blue. Now, I’ve $6,500 an the amex charge in available credit and a well above-average credit score. I pay in full EVERY month (except on the first card I got. It has a $175 balance on a $2k limit. I’m only paying the minimum due each month because it’s at 0% interest for any balance under $250).

    I think not teaching kids early to respect cash is dumb. The author of the list agrees. I, however, also think that it’s irresponsible to not teach children about credit early in life. Yes, I’m the exception that I’m in my second year of college with no debt, but I’m also the exception that my parents have taught we well about money and credit. With the necessity of credit for an increasing number of things in a person’s life – utility service, cell phone service, mortgages, employment, and otherwise – a good foundation in credit is necessary early in life.

    The lack of education about credit is one reason that the economy sucks for so many people. People use(d) their cards ignorantly (and albeit with abuse from credit card companies/banks), succumbed to the conditions of the contracts they signed, and then were surprised and PISSED when the card companies/banks honored the contract.

    Teach your kids about credit. and EARLY!

  47. no.no.notorious says:

    my parents taught me that ‘there is nothing more important than you need to spend your money on now than when you’re older.’ until i was about 10, because by then I had good money habits on my own.

  48. yso says:

    I started getting into debt BECAUSE I got a card in college. I say wait until they graduate!

  49. BytheSea says:

    No, do not let toddlers put money in vending machines. They think they’re toys that give real prizes, and they’ll develop an obsession and they won’t be able to pass a vending machine without whining for years.

    Whether to get your college kid a credit card, and whether or not you should be responsible for it, is vastly dependent on the kid. I know good parents who let their kids take them for tens of thousands of dollars because the kid was used to the help and they’d never taught the kid to stand on his own two feet. (BTW, it’s always boys in these tens of thousands of dollars stories, if only because parents are less assertive with boys so they don’t impinge on their little prince’s manhood. Girls, they micromanage forever.)

    I’ve also seen authoritarian evil parents who put the fear of god into their kid, so the kid kept a strict control on her own spending.

  50. BytheSea says:

    @floraposte: I don’t think that’s how allowance discussions are usually given. It’s not, “this is household money and you’re entitled,” it’s “this is my money but you’ve appeased me in recent memory so I’ll give you some. Not that you deserve it, you horrible child.”

    *The last sentence may be bibliographical.

    Paying kids for chores is supposed to teach them responsiblity for hard work and all, but it doesn’t really work when they discover they can make $20/hr to babysit a sleeping child, or $5.50 an hour for a grueling, body-aching, degrading cashier job.

  51. wufflebunny says:

    My parents signed me up for a credit card when I was 16 but kept it (and gave me a debit card to my own account instead). I didn’t get my own credit card to use til I was 23. I think it was an awesome idea on their part as I still got the credit history, but now (7 years later) I am still not in the habit of using a credit card. Basically, if I don’t have the cash for whatever I want to buy sitting in my account, I will not buy it. I use my CC for things like airline tickets etc but thanks to my parents, have never overspent on my card, and pay it off in full every single month.

  52. superbureaucrat says:

    I’m going to weigh in on this and add that in one of these ages, (if they have a job) opening an IRA or other long term savings vehicle. As a 14 yr old, this may seem odd starting to save for retirement. I’m in the process of opening an IRA. Also, encouage investing. I have had a brokerage account for several months, and am up 27% in 6 months. A good way to encourage investing is to make an offer saying that any profit made investing will be matched when they turn 18.

  53. oneandone says:

    Credit card during college can be tricky – I got my first during my second year, and ended up leaning on it the next year when I couldn’t make enough at low-paying part time jobs during the year, and took unpaid internships during the summer. My family is extremely frugal and has no debt, but despite my good spending habits & all attempts to keep expenses low, I ended up with some cc debt, which turned into more cc debt, which turned into the paying-off-one-card-with-the-others problem until I realized that really, really serious self-discipline was in order.

    5 years later I finally have a great job & got rid of the cc debt, as well as 1/3 of my student loans, but it can be easy to misjudge your options when things get tight. Having good math skills, making a realistic budget, and learning about financial systems (and what affects your credit score) was the most helpful – plus having some loans from friends/family so I wouldn’t get stuck in more debt.

    So it ended up being neccessary to have a cc in college (plus I do enjoy having the longer credit history) but it’s been a BIG pain dealing with how minor debt can become more serious.

  54. anatak says:

    @waffles: And a credit card is needed to do that?? Really, those lessons should ideally happen at 14 or 15 with a basic checking account. In college, a good part-time job with and a debit card will keep you out of debt and earning your spending money. Parents, if needed to chip in for various things like books, can just make a deposit to your account.