How can you get your kids to understand credit?
You have asked the question all of us would love to have a single, simple answer to, but it’s a complex issue that involves parents, schools, teachers and businesses.
Experian is committed to improving our children’s financial literacy and supports a number of programs to help both young people and adults better understand credit and other personal financial issues.
One of the things we are very proud of is our relationship with the JumpStart Coalition for Financial Literacy. Experian recently partnered with the JumpStart Coalition to host its First National Financial Literacy Teachers Conference.
In early November, more than 250 elementary, middle school and high school teachers attended the two-day conference in Washington, D.C. The purpose of the conference was to provide financial literacy tools and techniques classroom teachers can use to educate their students about credit and other personal finance subjects.
The tools and information they received will be taken back and shared in their schools and school districts, potentially affecting tens-of-thousands of children.
We also listened to what teachers had to say. They were unanimous in saying that financial education needs to begin in kindergarten and continue through college. They also said that parents must help, but acknowledged that many parents need financial education as much as their children.
As a parent you play a vital role in helping your children understand basic personal finance concepts, including credit. You can start with simple concepts about saving versus spending and wants versus needs. You can talk to them about how to balance a checkbook, and, you can sit down with them and go over your monthly credit card billing statement.
If you have a teenage child, you might consider adding him or her as an authorized user on a one of your credit cards to help establish a credit history. A credit history is a valuable asset. They will need it eventually to buy a car, lease an apartment, get student loans, and take advantage of all the services that a strong credit history helps a person obtain.
But, even as authorized users, it is important that you teach them how to use the account wisely. Let them purchase items on credit for which they must pay with their own funds. That prepares them for having a card in their own name.
Once a year you should check your own credit report. That would be a perfect time to talk with your children about how important good credit management is to their future.
In the end, there is no single, easy answer to helping our children understand credit or personal finance. We all have to work together, and Experian is committed to helping parents and teachers in that effort.
Thanks for asking.
- The “Ask Experian” team