Do Today’s Kids Know Enough About Money?

Posted June 10, 2010 by Bernz

It almost seems like a rite of passage – teenagers getting into college, finding more freedoms, and getting a credit card.  credit card companies have always been eager to supply college students with credit cards.  They often turn into customers for life.

While at first it seems like a great way to teach college students about credit, the new shiny credit cards don’t come with instructions or lessons.  For those kids who have never managed money in the past, it can be a nightmare – one that is hard to overcome as credit card bills keep pouring in.

The topic of handling money is not often taught in schools, leaving kids to get their information from friends, and what they think their parents are doing.  Parents themselves often don’t talk about money with their children.  Money is a taboo subject in many households; considered too crass of a topic to bring up.

But where does that leave our children?  Credit card debt among college students has doubled in the past 10 years and often students enter the working world with as much credit card debt as student loans.

New Federal regulations that come into effect in February are aiming to quell the tide of student debt.  Children under 21 will now be required two have a parent or other adult co–sign on the credit card account, putting the co–signers’ credit rating at risk.  If the student can’t get a co–signer, he or she will have to show that they have the financial means themselves to repay the debt.

Restricting access to student credit, however, is not the same thing as teaching our children how to handle money.  Kids need to learn about debt and its consequences.  They also need to have supervised experience in handling money, making budgets, and tracking expenses.

Children who don’t learn about money at a young age often grow up to become adults who have few money smarts.  These are the adults that are not discussing money with their children because they themselves do not know the best ways to handle it.  The best thing we can do for our children is to teach them the financial skills they will need later in life.  Discussing the family’s own financial situation with children is a good way to start.  It helps children to understand the value of money and what things cost.  It also helps them to understand that money is not an unlimited resource and that it doesn’t actually come from ATM machines.

Teaching the next generation fiscal responsibility will help the country to avoid the deep recession it has experienced in the past year and it will help our children to become truly financially independent.

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More on this topic (What's this?)
New Credit Card Minimum Payment Rules (Michael James on Money, 6/9/10)
That $9 charge on your credit card (Canadian Business Blog, 8/23/10)
Beware the M2 Credit Card (Canadian Financial DIY, 5/25/10)
Read more on Credit Cards at Wikinvest

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This entry was posted on Thursday, June 10, 2010 at 8:26 pm and is filed under Saving Money, Saving for College. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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