What information do you give your kids about credit?

[swaymonae]

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It's scary that as early as 18 years old, kids can start accruing debt.

How do you keep your kids informed about the importance of financial responsibily, saving, and fico?

We could all blab on for days about the facts, but what information can we give to kids who want to go out and buy everything that will make them make better decisions? What will they listen to?

How do each of you talk to your kids or plan to talk to your kids about finances? What key information would you convey to them about...


Credit Cards/Debt
Investing/Savings
Fico Scores

etc...

[disneysteve]

I started "Dad's Financial Academy" with my daughter when she was 9 or 10. We've had a number of set lessons along with all the day to day conversations. One thing I got her doing was balancing the family checkbook. She's been doing that since she was 9. It actually started to help her with her arithmetic but grew into a valuable lesson on how much it costs to run our household, how much comes in and where it all goes.

As for credit, in one lesson I had her make a hypothetical $100 purchase at a store and discussed all the options of how to pay: cash, check, debit card, credit card. I explained how each one worked, pros and cons of each. I focused especially on credit cards. I used an online calculator (at bankrate.com) to run simulations of how much the purchase would actually cost and how long it would take to pay it off if you only paid the minimum payment each month. She was really impressed by that and, I think, understood pretty clearly why carrying a balance is a bad thing.

Another thing that we've done for quite a while is watch the Suze Orman show each week together as a family and discussed various issues that get raised on the show.

And, of course, the most important lesson is leading by example. She sees us use our credit cards practically daily to make purchases, but I make sure she sees the other end of the transaction when the bill gets paid each month (which she sees when doing the checkbook).

I'm also a big fan of an allowance, requiring her to pay for certain purchases and learning to decide how to spend her limited funds, budget and save for bigger items.

[wnlbutterfly]

I just mentioned this to DH today. Our oldest children remember our family during leaner years, they are both very good with money. We did things like if they wanted to buy something new, they had to raise 1/2 of the cost and we would match. Usually it meant selling some things at yard sales (pre-eBay). I was doing craft shows at the time and I would buy supplies for them to make things and then any sales they could keep. They would also get paid for working the shows with me.

My daughter had a class at high school on finances and she would come home and give ME information. I am not worried about those two.

But then there is the baby of the family. 12 yr old son, who lives in a nice home (no more rentals), he has a lot toys and game systems from the older sibs. He has a set of parents that are at a different financial time in their life. We had 12 yrs between the oldest and youngest. He is very math oriented, but I need to start talking money sense with him.

[maat55]

I did not become a financial nut until my kids were grown, but I tell them:

PIF on CC's.
Invest 10%
Pay cash for consumer goods.
Establish a financial structure and stick to it.

[disneysteve]

Originally Posted by wnlbutterfly

But then there is the baby of the family. 12 yr old son, who lives in a nice home (no more rentals), he has a lot toys and game systems from the older sibs. He has a set of parents that are at a different financial time in their life.

We face the same problem, despite what I said above. DD will occasionally hear a story on the news or on Suze Orman and ask, "Why don't they just pay the bill?" or "Why would they do something like that?" and we have to explain that we are very privileged and there are lots of people who can't "just pay the bill" so easily. My wife and I are often telling her stories of how we grew up. Neither of us was poor by any means - both solidly middle class - but middle class in Philly in the 70s meant something very different than middle class today in the suburbs. I tell her about my first apartment, or my second or the house we rented when we were first married. We try to impress upon her the fact that we haven't always had the life we enjoy today. We started with a lot less and worked hard to get where we are now.