You know how important having good credit is. You want your teen to have the best possible start, which is why you’re already thinking of helping him or her build good credit now. The following are a few tips that could help your teen get a great score.
The first thing you need to do is to make sure you open a checking and savings account for your kid. Teach your child about penalties associated with these accounts and some of the perks like compounding interest. Let your teen deposit money, and get your kid a debit card. What you’re doing here is teaching your kid how to manage money. You want to make sure they know the value of money before you move on to a credit card. Be patient with your kid; it might take some time to manage money well.
It’s time for your teen to get a job, especially now that you are trying to teach about finances and how to build good credit history at a young age. An allowance is nice, and so are monetary gifts from family or friends, but your teen must learn how to earn cash. There’s something special about making your own money. This experience will help your kid learn the value of money. It’ll expose him or her to different environments and social situations.
Get a Credit Card
In the beginning, it may be a good idea to add your teen to your credit card account. Do this only if you’re in control of your credit already and can handle this change. Adding your child to your credit card does help your kid build good credit, and you get to keep an eye on how money gets spent. If you feel comfortable with your teen having his or her credit card, then go ahead help your teen apply. Be sure to set some rules on what can or cannot be bought. Monitor your teen’s spending to make sure everything is okay.
With credit cards, bank accounts, and a job, your kid might start to budget on his or her own, but this is not always the case. You want to make sure your kid learns to budget money well. Several free tools and apps that can help your kid create a budget. Talk about long-term goals like taking a vacation or buying something big like a car. These kinds of conversations should help your teen see the value of planning. These skills are going to come in handy in college, and when your kid finally enters adulthood officially.
Financial literacy is something that should be taught everywhere, but it’s not. These classes help folks learn how to budget, spend money, and create new streams of income, among other things. You want your teen to learn from professionals as soon as possible. Yes, you’ve got some financial knowledge to share with your teen, but having him or her go through an entire course is wise. Financial literacy classes are also available online, so they shouldn’t interrupt your kid’s school studies. You could even take these classes along with your teen if you haven’t.
As you can see, you can be of great help to your teen right now when he or she may not know everything there’s to know about finances and what’s possible if they take it seriously. If you take these steps, your kids will have a much better chance of managing their money responsibly into adulthood.