August 29, 2022
Every parent wants to raise a successful child. Whether they grow up to be engineers, doctors, entrepreneurs, or artists, children will need to understand the basic disciplines of managing money. Hence, it is very important for every parent to financially educate their children – something that is not taught in school or colleges. One way to inculcate financial discipline is by opening a bank account and giving them debit or credit cards (a supplementary one with a cap on spending).
It may sound odd & crazy, against the traditional way of doing things - but if you let teenagers manage their own budgets, they will understand the value of money and concepts of credit. They might make a few mistakes initially but eventually, they will only gain from it as understanding the right use of debit and credit is very critical for them to learn.
It may sound odd & crazy, against the traditional way of doing things - but if you let teenagers manage their own budgets, they will understand the value of money and concepts of credit. They might make a few mistakes initially but eventually, they will only gain from it as understanding the right use of debit and credit is very critical for them to learn.
Top 5 things about credit card usage that is best absorbed at a young age. Basic budgeting gyaan:
Put a weekly or monthly limit on the card, and your teen has to manage with that. This would make him/her more financially responsible and he will think twice before making a purchase.
Rewards:
Most cards come with rewards. These can be points for gifts, cashback, discount on petrol or travel miles. How to benefit from them, but still not overspend is one key learning. Early credit card users keep spending to get more reward points, but is it worth it. Need to understand these aspects.
Emergency use:
A credit card is particularly useful in emergencies. How and when to make use of it emergency is one learning.
Credit history:
Credit score is important and knowing what it is will start with such exercise early on in their age. How to use it prudently to get the best score is knowledge the children need to learn.
When to use Credit Vs Debit:
Surely we as parents need to maintain control and tap on things, but the idea here is to make the child financially aware of these important aspects of credit and debit in a practical way.
At RUSSH our goal is to share the right financial knowledge for all of us to make prudent financial decisions. We acknowledge Economictimes for encouragement/inspiration for this article.