Teach Your Kids to Avoid These Common Credit Mistakes
As your kids grow, as a parent, you want to provide them with the foundations for financial success–and that includes teaching them what not to do. Do you want your kids to grow up financially savvy? Prepare them for these common financial errors and how to avoid them.
Ignoring Their Credit
Many kids assume that they can ignore their credit until they get older. After all, if they don’t take out any loans, it can’t be bad, right? Unfortunately, failing to take out credit can be just as detrimental as many other common credit mistakes. Encourage your children to make safe, careful choices that will help them build credit so that when they need to take out car loans or a mortgage, they’ll be able to accomplish it.
Avoid Using Credit to Its Limits
While some kids are avoiding credit at all costs, others–especially as they enter college–may take out loan after loan, quickly maxing out credit cards and taking out student loans, then barely meeting the minimum payments for months or even years afterwards. Instead, encourage your kids to take advantage of credit to a point, but to carefully consider what they can really afford–and how those loans will impact them long-term.
Avoid Spending Money They Don’t Have
In order to build credit effectively, your kids need to know how to build their credit without overspending. It’s easy to fall into the trap of using a a credit card for everything. After all, it’s there, right? Instead, when building credit, it’s important to spend only what they can afford. Ideally, in those early stages of credit building, kids should use credit cards for things like gas or groceries, then be sure to pay them off each month.
Building credit is an ongoing process that can take a lifetime–and fortunately, it changes on an ongoing basis, giving plenty of leeway for your children to learn from their mistakes and build their credit more effectively in the future. Need to learn more? Contact us today to learn how we can help.