IN Brentwood-Baldwin-Whitehall Fall 2018 | Page 21

INDUSTRY INSIGHT
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INSURANCE
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TIPS FOR TEACHING KIDS ABOUT MONEY
eaching your kids about money when they’re young
can help them build good financial habits. Here’s how to
tackle the credit topic with your children.
START SIMPLE.
Explain what credit is: You borrow money to pay for
something with the intent of paying back that money within a
certain time frame. How well you pay that money back can impact
your credit score. If you miss payments, it lowers your score, may
cause you to pay more, and may prevent you from borrowing what
you need in the future.
Tell them that it can be smart to borrow as little as possible, but
it’s not always bad to have to borrow money for instance, for big
purchases like a house or an education (https://www.learnvest.
com/2013/03/5-things-toteach- your-kids-about-credit-while-
theyre-still-young/).
LOOK FOR TEACHABLE MOMENTS.
Your kids may better grasp the concept through real-world
application:
• While shopping, pay for one purchase with cash and the other
with a card. Explain that the credit card is not free money, and
you’ll have to pay the bank back later.
• When your child asks for an advance on her allowance, explain
that she’ll have to pay it back by a certain date, just like you do
with your credit card.
• If your children want an expensive new item that you can’t
afford, explain that a credit card doesn’t exactly make it
attainable. If you charge now but still can’t pay the amount
when the bill arrives, you’ll end up paying more than the
original cost.
PUT DISCUSSION INTO ACTION.
Set your children up for success through the bank of Mom and/
or Dad:
• Allow them to borrow a set amount of money from you (credit
limit) and write down when they need to pay it back (due date).
If they don’t pay on time, charge them a late fee and calculate
interest on the amount owed. They may protest, but they’ll learn
the lesson from you instead of from a less-forgiving credit company
down the road.
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BRENTWOOD-BALDWIN-WHITEHALL
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FALL 2018
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