Relying on Credit Cards May Be Hurting Kids’ Financial Outlooks

Friday, March 7th, 2014 By

Credit cards and expenses

Many children watch their parents live on credit cards. When they need a new item or have a bill, their parents reach for their plastic card and magically they complete the transaction. Relying on credit cards does little to truly teach children about managing money or being financially responsible adults. Here are some tips on finding ways to teach children about money.

Teaching the value of money

Schools teach reading, writing and math, but rarely do they cover everyday tasks such as paying bills, understanding budgets, or working with interest. It’s up to parents to do the educating of children in this area. Here are some steps for you if you’re trying to teach your child about money:

1. Start teaching children early about money. Gone are the days of letting a child live completely oblivious to finances. In today’s tough times, children need to know that money has to be managed. Some of the ways to do this are to teach children about saving their hard-earned cash. Let them see their dollars accumulating in a box or drawer. When it’s full enough let them take it to their bank account and deposit it. Visual learning is a great way to get a message across. If they see their money growing, they can get an idea of how it will work in the future.

2.  Teach children where money comes from and the correlation between work and pay. Normally children believe that money “comes from mommy and daddy.” When mom and dad are out of cash, normally credit cards take care of purchases. Every child should be taught the basic concept of how working brings in money. And then how money buys things. And then how we use things and repeat the cycle. Paying children for out-of-the-ordinary tasks, like helping clean out a garage or attic, can also help them see the value of hard work.

3.  Consider offering your children allowances.
Experts debate the effectiveness of allowances and whether or not children should be paid to do everyday chores. One way to handle this is to pay children for large tasks that aid the family, but do not pay them for their responsibilities. Their responsibilities can include keeping their rooms clean, sweeping and mopping, picking up their toys and helping with laundry. On the other hand, if the family is having a garage sale, they could pay the child for keeping everything lined up neatly or organizing goods to be sold.

4.  Make the savings plan interesting. Depending on your child’s age, help them to engage in saving money. For a younger child it could mean decorating a piggy bank. For an older child it may mean helping them save for a bicycle or larger item.

The importance of finances

With the recession hitting hard, it’s more important than ever to understand how finances work. Children need to have some instruction from parents on how to make money, how to save money, how to budget money, how credit cards work, how loans work, and how to manage it all. For their futures to be secure, they need everyday learning presented at an understandable level. Working to educate children today helps create financially responsible citizens of tomorrow.

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This post has 6 comments

  1. Process USA says:

    Children also have to understand that the credit card is not a magic wand so to speak. When the time comes when you feel it necessary to give your child their first card, start off with a debit card, so they understand that it's not an unlimited source.

  2. Susan Ahlfeld says:

    Dear Kevin,

    Great informative steps! I'm a certified financial planner and just wrote a book for children (ages 5-9) teaching them how to follow the financial planning process to get what they want. And it doesn't involve credit cards :-)

    Would it be possible to send you a copy for your review and discuss the importance of teaching kids early on the priciples of financial planning on your blog?

    Thanks for your consideration,

    Susan Ahlfeld (

  3. DJ Britton says:

    Great article. Its so important to be aware of the conscious and subconscious beliefs around money that kids pick up from their parents.

    We should aim to provide practical prudent guidance balanced with ideas of potential and empowerment.

  4. Teach Kids About Mon says:

    OK, these are solid steps Kevin. Step 4 I think is crucial for success in your lessons, keep it fun! There are lots of great interactive games, etc out there for kids to help them learn to be financially responsible! Cheers :)

  5. Franrose says:

    Great tips! A month ago, my mother mentioned how she just now realized the effectiveness of allowances. Then again, she had eight kids to worry about. Money didn't come easy and I know my parents struggled and worked very hard to make sure we all had food on the table and a roof over our heads. They did everything and sacrificed a lot just to meet our needs, and I'm thankful everyday for it. We hardly ever had money in our pockets. Once in a while, we were given 50 cents each ($1 for the older siblings). It wasn't a lot of money but we were grateful to even be able to buy an ice-cup. Nonetheless, that never stopped them from teaching us the responsible use of money. Just the hardship we went through as children has taught us a lot about money, and the hard work behind the making of money. I have to say my childhood was the happiest time of my life.

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